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INSIGHTS FROM DAVOS 2016
The theme of Davos 2016 was The Fourth Industrial Revolution in recognition of the range of upheavals driven by technological advances, including robotics, genetic design, 3-D printing, Artificial Intelligence, the Internet of Things and the exponential power of connected mobile devices. This was a very fitting theme for the advertising and marketing industry and many big issues being discussed at Davos have direct implications for brand leaders and marketers.
Changes and uncertainty in the global economy were discussed at length. Not surprisingly, China was top of the agenda for many leaders, with concerns raised about how the slowdown in the Chinese economy would affect the rest of the world. The European Union was also a key topic of discussion, with the UKs possible exit causing considerable concern.
The issue of global inequality is a consistent Davos theme and this year Oxfams report highlighted the growing concentration of wealth among a tiny elite.
Leaders debated this and the growing problems of inequality of opportunities relating to race and gender.
And, in line with this years theme, the issue of technology and automation was discussed throughout Davos. The WEF made stark warnings about job losses unless the implementation of new technologies is properly managed. But this was counterbalanced by a far more optimistic sentiment about the growth and benefits that technology will bring in the coming years.
As in previous years, Publicis Groupe had a delegation of leaders attending Davos, who listened to the debates and discussed the key issues with other leaders. This review of Davos 2016 has been put together with input from Publicis Groupe leaders, noteably Rishad Tobaccowala, Chief Strategist, Publicis Groupe, who is the author of the Implications for Business section.
INSIGHTS FROM DAVOS 2016
IMAGE CREDITS: CC / FLICKR World Economic Forum
GLOBAL ECONOMYCHINAHaving shown 10% GDP growth for much of this century, Chinas economy is now slowing, prompting predictions that emerging markets will be taken on downward trajectory and raising concerns about the negative impact on global markets. The World Bank is predicting a respectable 7% growth for this year, but workers and investors alike are set to be affected by Chinas slowdown.
The IMFs Christine Lagarde said China is having to manage three transitions in its economy: a)export to import, b) infrastructure to consumption-led and c) high growth to mid growth. The decline in oil and commodity prices, currency wars and softness in emerging markets (with the exception of India which remained a shining star at Davos) were all seen as originating in China. In addition to the economic challenges, China faces a demographic challenge of an aging population, and an environmental problems which are causing significant health issues.
Opinions differ on whether China is facing a hard or soft landing. While some leaders and economists are predicting the worst, there were key figures at Davos taking a more measured approach. The Governor of The Reserve Bank
of India Raghuram Rajan said that he believes there is underlying growth in China and that the country is not falling off a cliff. Jiang Jianqing, Chairman of the Board, Industrial and Commercial Bank of China said that he did not believe there is volatility in the Chinese economy. The general belief at Davos was that China would be OK if its leadership maintained the faith of its key internal constituencies, its numbers could be trusted, and it did a better job communicating its intentions.
EUROPEWhile much of the discussion about global economies focused on China, there was also considerable attention placed on the European Union. Over the past few years, the EU has had to deal with the refugee crisis, civil wars noteable Ukraine the Greek economic crisis and the rise of terrorism and extremism. And now the EU is having to contend with the threat of border closures and a possible UK exit.
The UK is expected to hold a referendum this year on whether to stay or leave the EU. There is considerable uncertainty over what exactly a Brexit would entail for the UK economy and for the rest of the EU. Swedens former Prime Minister Carl Bildt who chairs the WEFs Global Agenda Council on Europe described a Brexit as a turning point for EU integration. A WEF report said that if the UK decided to leave the EU, the United Kingdom will probably disintegrate and European integration will possibly suffer an irreversible setback. Several European leaders have said publicly that a Brexit would be a disaster for both the UK and Europe.
Several leaders at Davos agreed that the possible Brexit hanging over the EU is leading to concern and uncertainty among business leaders. One business leader said that when there is uncertainty business is at its worst. The EU situation was just one area of uncertainty discussed at Davos that global business leaders are having to contend with.
SOCIETYINEQUALITYGlobally, just 62 people have as much wealth as the bottom 3,700,000,000 (3.7 billion) and the top 1% control more wealth than the remaining 99%. This was the stark finding from a report from Oxfam, which has traditionally used Davos as an opportunity to remind the global elite about wealth inequality. Oxfams report was a clear warning that wealth is becoming increasingly concentrated in the hands of a small group of billionaires.
These trends of wealth concentration have been growing due to a combination of government actions biased towards capital, slow growth and the ability to replace carbon based life forms with silicon based digital computers.
In addition to economic inequality, there are the inequality of opportunities related to gender and race, and increasingly related to connectivity: half the world is connected to modern science and the other half lacks electricity, water or the internet. The Edelman Trust Barometer released during Davos - shows that the top quarter of society is regaining its trust in business and leaders while the bottom 75% are losing trust. Overall,
Edelman reports: An alarming evaporation of trust across all institutions, reaching the lows of the Great Recession in 2009. People all over the world are now questioning our leaders. And people are speaking out about leaders with short term policies, selfish attitudes and narrow goals. As one speaker at Davos noted: we have rulers not leaders.
IMMIGRATIONGlobally, there are 240 million immigrants and while historically immigration has been a net positive - and shows no sign of slowing - it has become a huge issue due to lack of economic growth. Increasingly, we are seeing anger among certain sectors of the population about the increase in immigration. There are now 60 million displaced people and their numbers are increasing exponentially due to the troubles in the Middle East and Africa, which is overwhelming Europes sense of self and its open borders policies.
Leaders at Davos debated the growing migration crisis and how best to integrate refugees in the communities which shelter them. Queen Rania of Jordon talked passionately about the Middle East turmoil driving millions overseas. Jordan hosts 1.3 million refugees and Queen Rania called on other countries to help. She and the other panellists said that a paradigm shift was needed to help the worlds refugees as traditional methods no longer work on their own.
The quality of leadership around the world will have a significant impact on our collective ability to deal with
the growing issue of migration. And according to Klaus Schwab, the founder of the WEF, the problem is only going to get worse with plunging commodity prices. In an interview with Bloomberg, Schwab said: Look how many countries in Africa, for example, depend on the income from oil exports. Now imagine 1 billion inhabitants - imagine they all move north.
TECHNOLOGYROBOTICS AND AUTOMATIONTechnology was clearly going to be high on the agenda at Davos, with this year theme of The Fourth Industrial Revolution, referring to the economy-changing technologies and a report written by WEF founder Klaus Schwab. With the growth of robotics and automation, economists and leaders alike are speculating about the numbers and types of workers that are going to be laid off and what this could mean for gender and income inequality.
The WEFs report says that significant technological advances are transforming the labour markets beyond all recognition from decades ago, while predicting that it will lead to a net loss of over 5 million jobs in 15 major developed and emerging economies by 2020. The report said that economies such as Australia, China, France, Germany, India, Italy, Japan, Britain and the United States would feel the impact. The report concludes that without urgent action to manage the near-term transition and build a workforce with future-proof skills, governments will have to cope with ever-growing unemployment.
Despite the dire warnings in the report the overall mood at Davos was that we are benefitting from most amazing technological advances. If future technology is applied correctly it could transform society and create trillions of dollars of new economic benefit. And according to another WEF report Digital Media and Society and its Implications in a Hyper Connected Age most consumers see huge benefits in a digital society. These benefits would not just be in more wages and better lifestyles but better health, more immersive and empathetic story telling, wider distribution of culture and much more. The question is how will businesses, governments, society and leaders understand and adapt to meet the worlds needs.