0:03

This is the economist Dolla Sign and

0:05

the Cove we bringing you to show this week from

0:07

the world economic Forum in Davos. And

0:09

we're asking how is war in

0:11

Ukraine, changing the world economy. Is

0:16

the place high up in the Swiss Alps with a global

0:18

of gathered since Economist found

0:21

at the 51 years ago,

0:23

ever since he's convinced

0:25

business and political leaders along

0:28

these days with ngos sprinkling

0:31

of celebrities with pet causes all

0:34

debating major issues that impact

0:36

global well being it's first

0:38

time the forum has met in over two years

0:40

and smaller gathering this time instead

0:43

of usual snow capped mountains in winter

0:46

spring snow in sunny showers will

0:48

around us the wider backdrop

0:51

however frosty

0:53

delegates dis invited and the

0:55

russia house recast as an exhibition

0:57

of war crimes committed against

0:59

ukraine in

1:01

the hubbub of the conference centre just behind

1:03

me and some fine dining in

1:06

ritzy hotels in evening the spectre

1:08

of a recession and de globalization

1:11

of dominant concerns so

1:13

how two scenarios interlinked

1:15

and how will war in europe affect

1:17

and already stressed world wide economy

1:23

later we'll hear from historian and economist's

1:25

adam team for long view events

1:27

and from adena friedman president

1:30

and the a with nasdaq for perspective

1:32

from the markets but first a

1:34

joined by the economist's team here with

1:36

me at davos patrick fowles

1:39

is the economist's business affairs editor and

1:42

shaner but is our finance and economics

1:44

editor hi patrick in hi ann

1:46

and i rather i and thanks

1:48

both for escaping your bilateral to join

1:50

me patrick the world economic

1:53

forum the wef as we say round here is

1:55

back after its to your break

1:58

feel like the same old you war

2:00

in new era

2:01

i think it's different in to notable

2:03

ways one is the time of year say normally

2:06

this event happens in january it's not happening

2:08

and in may and i'm reliably told

2:10

by one of the people organizing at the the air conditioning

2:13

almost breakdown on the first day

2:15

and ever was going to sort of race to death

2:17

in the conference sense of which would be a new problem

2:20

but the other big changes really he's here

2:22

and and you mentioned the russians who have a

2:24

single prison but the twenties and or

2:26

here either and we picked one

2:29

of the three main on chinese people here

2:32

that that's probably about ten chinese

2:34

delegates officially delegates davos normally

2:37

would be several hundred and i

2:39

think it away that speaks to the

2:41

broader picture of a fractured world

2:43

where we have big blocks of the world

2:46

not here and as sort of division

2:48

between the western countries and some emerging

2:50

countries and a typical autocratic house

2:53

better this is your festival site

2:55

is who bless noticing who's not

2:58

here than who is what's

3:00

impression

3:01

i say as and economist sounds little big geeky

3:03

but it's very efficient way to meet people

3:05

you're sort have speed dating with big wigs

3:08

finding out what they think about the world exchanging ideas

3:10

with the it's just a very impressive wait

3:12

meet people especially after to years being locked

3:14

up and barely seeing and the it's great

3:17

something about turning round and finding

3:19

yourself lodged between major hedge funder

3:21

a central banker and a prime

3:24

minister deputy prime minister how long

3:26

you would normally have to wait access

3:28

these people say from my point view that works

3:30

very well but patrick the agenda

3:33

this year

3:34

obviously very conditioned by ukraine

3:37

and by coming out the pandemic

3:39

which speakers have stood out to

3:41

you encapsulating

3:44

problems we face well we have

3:46

president zaleski tune into

3:48

a breakfast meeting think you could get a sense

3:50

have him galvanizing the roman and just

3:53

how dominant the war is particularly

3:55

the european and american people here both

3:57

in a geopolitical even moral about

4:00

also just because of economic implications

4:03

the interesting thing we've picked up is the for

4:05

lot of the participants here from asia

4:07

here the war doesn't feel

4:09

central to the central feels very western

4:12

centric way of thinking about

4:14

the world

4:15

the interesting because we talk i that breakfast

4:17

veselin sky came on broadcast

4:20

of it being a ukrainian devil some some people

4:22

saying this very proudly

4:24

on i suppose it is for those

4:26

who a very focused on the ukraine crisis

4:28

but rather when you will looking more

4:31

broadly and talking to people from all

4:33

across the world do think that they

4:35

see it that way on

4:37

it's just one of a number of things

4:39

that moving around on the agenda concern

4:42

there's lots worries

4:43

the minds of business people in the central

4:45

bankers and policy makers we've been talking to

4:48

one is the economic and business

4:50

impact of the war the other concern is

4:52

what all of this means for the world economy

4:54

in europe worries

4:55

if there worried embargo in oil gas

4:58

the continent might slip into recession lots

5:00

of people worried about what's going on and china zero

5:02

covered strategy and lock dans there and what that means

5:04

to supply change think much

5:07

everybody we spoke to seemed to have some sort

5:09

doomsday disaster scenario what that might

5:11

mean for that business and economy that

5:13

they oversee

5:21

global food prices were rising even before

5:23

the war now soaring and expected

5:26

to remain high the un estimates the

5:28

fifth of ukraine's wheat harvest lost

5:30

in future harvest in russia

5:33

and ukraine in get the on

5:35

top of other problems with fertilizer what

5:37

if the short term long term solutions

5:40

that could mitigate if impending

5:42

is could is patrick the thing everyone's

5:44

focused on is whether that could be some kind

5:46

of agreement over releasing

5:48

the food stocks that were in odessa on

5:50

whether the russians would sign up stocks whether

5:53

perhaps the turkish government could lead that

5:55

effort but it needs be some kind of agreed

5:58

approach think the second is

6:00

is switching food

6:02

stuffs and changing people's diet so

6:04

we had a long chat with someone

6:07

closely involved with this and india where the

6:09

diminished supply of wheat which

6:11

is partly because the production india is suffered

6:13

from the weather the is going be

6:15

replaced by rice then i think longer

6:17

term you know points to the importance

6:20

of using , think technology

6:22

to deal with climate change and

6:24

can we grow more drought resistant

6:27

crops can we irrigate new parts

6:29

of the world but is clear the the

6:31

risk this food crisis this

6:33

actually rising because of climate

6:35

change and that's become another big long term priority

6:38

think something that i gained a bit of insight into

6:40

is the difficult decisions the need we

6:42

made by ministers couple that we talked

6:44

to for example had introduced bands on

6:46

exports listening to that motivation

6:48

for why they had done that the kind domestic

6:51

consequences of not

6:53

being able to afford grain for the public

6:55

programs

6:56

at a time when they know that demand would be really high

6:58

for example just lays out how difficult this question

7:00

is i think patrick your former correspondent

7:03

in india and protectionism

7:06

their in the wheat export ban looks

7:09

like a bit of a signal this could become

7:11

more commonplace is countries look to

7:13

shore up that own supplies

7:16

do you think is what

7:18

and well let me give you the

7:20

case for the defense from india which we hurt

7:22

and detail in essence india has not

7:24

normally a major wheat exporter on

7:26

has never been secondly india

7:28

has a big public procurement program

7:30

i think it's forty five million tons a year

7:33

which distributes to hundreds of

7:35

millions a very poor people not because

7:37

the wheat crop has been hurt by the

7:39

very weather the size of that stock pass

7:41

halved so india's ability

7:43

to distribute food to hundreds millions

7:46

of people on the border line have halved

7:48

in effect so i think the indians argue

7:50

we will never a big structural part of the

7:52

wheat market we've had a genuine

7:55

crisis of production and a hundreds

7:57

been forced and me essence governments

8:00

are aware the danger of a kind of tat for

8:02

tat series of bans on the

8:04

global trading system but also that quite

8:06

law governments of being put and really

8:09

really difficult situation where

8:12

probably they ultimately have to value

8:14

the welfare of welfare population ahead of

8:16

other countries and that's obviously dangerous

8:19

world bank warned recently the war

8:21

in ukraine the set caused largest commodity shocks

8:23

since the nineteen seventies the increase in energy

8:25

prices the largest since the

8:27

oil crisis of nineteen seventy three

8:30

am snark rather the haven't been coming

8:32

since nineteen seventy

8:34

that that was no no

8:37

old but that was the period

8:40

when up was the setting

8:42

the will economic forum precisely

8:44

to look at the impacts and get people together

8:47

look impacts major developments

8:49

in shocks in the world economy here

8:51

we are in another similar

8:53

era do you think high energy prices

8:55

are the result and here to stay

8:58

the reason why energy prices the higher moment

9:00

is of course the war in ukraine

9:02

and some of being put

9:04

on russia making it hard for russia it's

9:06

oil interest the ,

9:08

is whether climate change and climate

9:11

policy then means we may well be

9:13

in a world of higher energy prices for time

9:15

to come what least very volatile energy prices

9:17

and that's something that a couple of a central

9:20

bankers that i spoke to in past couple of days

9:22

that thinking about what does this mean for how

9:24

you set interest rates what does this

9:27

mean for how people think about inflation

9:29

then how people perceive inflation to

9:31

be i mean if they think it's going to be higher

9:33

for longer then they start changing

9:36

how they think about the wages that they need

9:38

and the income they need so again

9:40

the very sort of tricky problem here

9:43

for central bankers and try to work

9:45

out how persistent the shot

9:46

is big one of the big questions of the day sort

9:49

, the sort of uncertainty is clear mean we

9:51

spoke one of the big state owned oil companies

9:53

big obviously have particular side in in

9:56

this discussion but they did make two quite

9:58

pertinent points quite thought one is the travel

10:00

is just coming back properly on that could

10:03

increase the demand for oil by two

10:05

three million barrels a day from the

10:07

normal level of roughly hundred which

10:09

means does another upward demand

10:12

on energy and then secondly the

10:14

hostility towards the oil and

10:16

gas industry and the demand

10:18

that does the renewable energy transition has

10:20

meant capital investment in

10:23

fossil fuels has dropped probably

10:25

quicker than is optimal

10:27

and the result is result is the next few

10:29

years you will have quite quite energy markets

10:32

simply because there isn't of big extra

10:34

supply capacity and the world

10:36

it does sound as if countries

10:38

will find themselves with invidious change

10:40

tackling the energy crisis and

10:43

climber change which many attendees

10:45

years years saying now we're going get serious

10:47

about this do you see that to patrick's

10:49

attention the comes back will

10:52

back of this crisis in ukraine

10:54

and the other unwelcome events in the background

10:57

yeah will you're seeing governments probably subsidized

11:00

fossil fuels right to keep the price down say as

11:02

almost the exact opposite of what

11:04

from a cob and perspective you'd hope would happen

11:07

and then i think a longer governments so scrambling around

11:09

to secure new arrangements supply

11:12

of gas from places like cost a or

11:14

the rearrangement of the oil system

11:16

as the west stops by russian or then

11:18

the short term everyone's on in desperate scramble

11:21

to subsidize the cost the fossil fuels keep

11:23

cost on by new supplies and

11:25

then you'd hope the on a slightly longer term

11:28

horizon probably about five years the

11:30

rate of investment in renewables is

11:32

actually going be quite a bit higher now if you ask

11:35

me if i think that's going to happening say yes so

11:37

i think think what's happening is completely

11:39

devastating think the climate in the sense

11:41

the short term as you've got renewables necessary to

11:43

keep people warm and electricity

11:46

running and so on and then probably

11:48

the sense of privatization of climate change

11:50

bit further i to i think as much higher then of was

11:52

here say to years ago

11:54

in five years and find out if you are right rachna

11:57

record high food energy prices

12:00

mean the inflation the only increase

12:02

all around the world which

12:04

countries are feeling it may

12:06

see know you seeing the potential

12:08

pizza

12:09

pretty much everywhere i think with the exception of china

12:12

even japan is experiencing first

12:14

time in while of inflation will

12:17

it be here for while i think in

12:20

quite few places will probably around the

12:22

peak in terms of annual inflation rates

12:24

but the question now is after

12:26

, of inflation being to low

12:29

whether whether now going being a world of inflation

12:31

that's little bit higher than policy makers

12:33

would like so will people just

12:35

get used a demanding higher

12:38

wages will that expectations of inflation

12:40

start to rise and that's something that's we've

12:42

been looking into been thinking little bit about

12:44

and if you look at labor markets

12:46

in america even the europe

12:49

there really quite tight so does a lot

12:51

of demand a workers there vacancies

12:54

chasing fewer and fewer unemployed people

12:56

so you bring that altogether and does

12:59

seem like there's bit of impetus for inflation

13:01

to stay a little bit higher than

13:03

be central banks take all think

13:07

banks nightmare say we'll the central

13:09

banks won't has the companies to say well costs

13:11

going up we're raise prices you know we'll

13:13

take on all profits all the companies

13:15

the saying we'll pass it through to

13:18

customers on waters more war expecting

13:20

war big wage rise for are

13:22

employees are the end of this year say

13:24

the picture from companies from companies is unequivocally

13:27

the inflation has taken hold and

13:29

it's not going be that easy get back

13:31

i found myself in a coffee two two central

13:34

bankers behind me only a devil bankers

13:36

exactly

13:37

exactly i should job

13:39

maybe not but then

13:41

they were bed having very intense conversation

13:44

about inflation to tame inflation

13:46

the kind precious that they felt they were under and

13:48

some of the critiques they were getting the economist

13:51

here devils

13:53

the beyond and it just reminded me

13:55

how much it is on their minds

13:58

the the tools the the left in the he

14:01

came in place and match

14:03

i used to cover the european central

14:05

bank and i really didn't think i would see them

14:07

talking about raising interest rates for very long time

14:10

but it seems like you know this

14:12

signaling is very clear that that going be raising

14:14

interest rates central banks and

14:16

america federal reserve and uk

14:19

bank of england been raising interest rates already

14:21

they've pretty much all stopped

14:24

that been bank scheme so those of the sorts

14:26

of levers that they've got in they've in that to box

14:28

i think the danger obviously thing everyone's worried

14:30

about seen a in order to be credible particularly

14:33

the fed i ,

14:35

interest rates be like be seen to be raising

14:38

interest rates quite emphatically in the dangers

14:40

causes , big russians

14:43

and financial markets are to seen so far this

14:45

year a ultimately may trigger recession

14:47

in the you s so that's the kind of calculus think

14:49

a lot people trying to get the heads around

14:52

it's undoubtedly

14:53

the worrisome time for the global

14:55

economy the head of the international monetary

14:57

fund crystalline giorgia the declined

14:59

to rule out global recession if

15:02

the situation in worsens

15:05

what extent you think recession fears are already

15:08

materializing

15:09

you look around the world and the different pockets

15:11

have risks so europe its much more exposed

15:13

the energy shock coming its way that's the big

15:15

danger that america's got this inflation

15:18

problem its worse then anywhere else and

15:20

the fed may have to effectively trigger recession

15:22

to get under control and then you have the really

15:25

big wild card have china where can

15:27

you really have a zero covered policy

15:30

with a omar covariant and also

15:32

not have repeated lock downs the effectively

15:34

cut glaring to much lower level so

15:36

think there is in all the big

15:38

three pillars have the world economy really quite

15:41

obvious and glaring risks probably

15:43

in china and in russia their economies the shrinking

15:46

russia because of the impact of sanctions china

15:49

because of lock downs we saw some dreadful

15:51

monthly activity figures

15:53

for the month of april come out last week

15:56

which really come scared markets little bit

15:58

i think in places europe

16:00

in america maybe it's still risk that has yet

16:02

to materialize and you know everybody's laying

16:04

out the conditions in which the in fall

16:06

into recession but we're probably not there yet

16:13

twenty twenty to has certainly been stormy

16:15

year so the financial markets certainly

16:17

hear has volatility has impacted trading

16:20

i spoke to in friedman president

16:22

and ceo of new york stock

16:25

exchange

16:26

always try to put myself into mind of and investor

16:29

and when you are thinking about and investor

16:31

investing in a stock or investing

16:33

and any sort of market their job is to

16:35

try predict the future you know the future earnings

16:37

of a company and if you think about and

16:39

investor today and they're taking all those externalities

16:42

and trying to factor those into let's say a

16:44

discounted cash flow analysis for company

16:47

it's very would very difficult to understand

16:49

how you would then discount future cash flows

16:51

i think on the back of that that is making a difficult

16:54

for investors to make conviction buying

16:56

decisions it's much easier to sell then

16:58

to buy right now and you are obviously seeing

17:00

that manifests itself in the markets think the

17:02

other thing is is news of the day is is

17:05

factoring into the markets in a way that

17:07

i think you don't normally see when you

17:09

have lot stability in the environment

17:11

around you because of investors can process

17:13

that news in the context of a conviction buying

17:16

decision and to determine what

17:18

that means in terms of factoring again but when you

17:20

of all these other externalities on top of that

17:22

and then you of news pouring in every day it

17:24

makes it very difficult for them again to make

17:27

those decisions which of course then can the

17:29

volatility the markets i wondered if

17:31

you could remember time or

17:33

or reference point in history

17:35

like this whereas you say world

17:38

events different parts

17:39

the world are impacting very quickly

17:42

and directly

17:43

i'm taking out financial crashes being

17:45

case of it doesn't remind you of anything

17:48

i actually think that it doesn't actually

17:50

three honest the you and i've been with nasdaq since nineteen

17:53

ninety three so i have definitely seen

17:55

different cycles different think that this

17:57

that this interesting because we're finding now

18:00

global supply chains that is a part

18:02

of the economy that really has changed

18:04

dramatically in the last ten to twenty years so

18:07

the reliance that we have the inner dependence we have

18:09

on each other has made it so that

18:11

world events somewhere else in the world have an impact

18:13

on your own domestic market right think

18:16

second thing is technology has really

18:18

kind have brought us all closer together but also

18:20

made information readily available which

18:22

that impacts markets faster it also makes

18:24

it that investors from all have the world have

18:26

access to markets but they are also

18:28

impacting markets then impacting then volatility in the markets

18:31

new ways as well in addition to the

18:33

fact that you have combination economic

18:36

factors like inflation and changes and

18:38

fed monetary policy on top of geopolitical

18:40

unrest situation in a you know significant

18:42

part the world on top of the fact that we're

18:45

we're still coming out of pandemic so the supply

18:47

chain shocks that are coming off of that that confluence

18:50

of factors that i don't think we've ever experienced

18:52

before again investors don't have

18:54

any point of reference so when they're again

18:56

they're trying to predict the future they don't really

18:58

know the future could look like because they've never seen it before

19:00

before don't supply chains i found to

19:02

very different views around is you

19:05

will economic for most people

19:07

saying this is still a real problem and

19:09

we will see it will see it when we go to something

19:11

and it takes ages still in available

19:14

the price shoots up i've also

19:16

in heard some people saying well actually

19:19

it's bit like making it's making

19:21

its way through but some of

19:23

will from the pandemic will unblocking

19:25

and and we might get better than expected

19:28

news when it comes to

19:30

say the next quarter where

19:32

, on that well think

19:34

first supply change challenges

19:36

there several factors to contributing to it

19:38

some are structural the the port system the united

19:40

states is just underdeveloped and

19:43

therefore when we had huge surge

19:45

of demand for good posters

19:47

weren't able to accommodate that amount

19:49

of supply coming into the country and that

19:51

is a a challenge that will work itself will

19:54

more like pig python right moving moving

19:56

its way through i think the

20:00

but then you also then have the supply

20:02

change shocks from let's say the

20:04

lock downs in china think that that's a new

20:06

factor that then has to work its

20:08

way through hopefully as china returns

20:11

to a normal operating model in the next

20:13

few weeks from then you'll have the geopolitical

20:15

rest that really creates supply chain shocks and food

20:18

and energy the all of those

20:20

have to work their way through system so so

20:22

they a be you those hundred related

20:25

a demand oriented i say

20:27

a why change shocks for goods those

20:29

i think that they might a bit over time but

20:32

then you have to still see these new ones working their

20:34

way through and i think that's why will probably

20:36

be a little bit more have a long are lasting challenge

20:38

think pagan plan is goods be might lasting

20:41

way from these pop of

20:44

it was a record setting twenty

20:46

twenty wanting the i few market these few

20:48

little more challenging will these seeing in

20:51

terms have companies wanting to

20:53

go pop let's or taking

20:55

a bit more will let's wait and see that's have

20:57

about the big plan we the about

20:59

to hundred and seventy companies on through

21:02

to let's to now say right now which is actually now higher

21:04

number then we had it the same time last year however

21:07

i think that they are certainly

21:09

waiting to make sure that when they go to market

21:12

that investors are ready to take that risk with

21:14

their capital and put their investment behind them

21:17

so you have to understand when company is thinking

21:19

about markets their think their thinking few

21:21

things one are they ready you are to they the

21:23

control structures and to they

21:25

have the ability discuss their business plans

21:28

they have the ability help the predict the future

21:30

through you know and understanding of the business

21:32

model an how it's going progress but

21:34

then also our investors there

21:37

and ready to put their capital the work take

21:39

a risk on a company that they may only

21:41

met i think that that's where

21:43

the challenge is right now we have a lot companies

21:45

that frankly are quite ready i've met

21:47

with a lot of really really interesting businesses

21:49

that want to access public

21:51

investors but they not want to know that

21:53

those investors are ready to invest them

21:56

and right now i think it's very difficult calculus

21:58

for investors so you're seeing companies on

22:01

the sideline for period time we'd like

22:03

to think that of inflationary effects start

22:05

to abate and therefore the monetary

22:07

policy decisions feds making are starting to have

22:09

the positive impact i chains start to

22:12

improve those to things i think

22:14

alone will make it much more comfortable

22:16

for investors to be able to make that risk decision

22:19

is always tomorrow in the markets there's always the day

22:21

off the always the week off tomorrow the

22:23

year off to tomorrow what do think longer

22:25

term challenges all yes

22:27

the markets are an eternal journey always i

22:30

think challenges for the markets as we go forward

22:32

is just finding are footing having

22:35

some of these unknown factors

22:37

become a little bit more known starting

22:39

to see some directional

22:41

element broader economy we

22:44

that have course will create more direction to the market

22:46

now the big challenge that we having the united states

22:49

is having the federal reserve

22:51

make their policy

22:53

gifts and do the

22:55

gracefully way draws

22:58

some of the demand out of the market tries

23:00

to take some of that growth

23:02

down without turning into negative territory

23:04

and i think that that's the confluence of things one

23:07

is they underpinning of the you s economy

23:09

continues to be fairly strong when you look at consumer

23:11

spending and you look at some of the underpinnings also

23:14

fiscal policy decisions that were made a year ago

23:16

are still to point capital into the

23:18

system but at the same time

23:20

same time that consumers need to feel confident

23:22

about their future to because that factors

23:25

into whether not they start to pull

23:27

back on spending they save their money therefore

23:29

that man curves consumer so they want

23:32

that they don't to much that think that's

23:34

the delicate dance that the that's have have

23:37

in diana freedman the ending conversation

23:40

with her thoughts on what picture is

23:42

markets in years ahead

23:47

one of daunting challenges facing world

23:49

leaders meeting here at davos the watching

23:52

from afar is the eventual construction

23:55

of ukraine

23:56

in his address on monday the forum president

23:58

volodymyr zaleski said his country

24:01

had suffered half the trillion dollars

24:03

of losses fonda ,

24:05

and president the european commission called

24:07

for more european solidarity to

24:10

explore how reconstruction might work

24:12

what implications the war will have on

24:14

future economic world order i

24:16

spoke the historian and economic

24:18

i him two i started by asking

24:21

him what shape ukrainian economy

24:23

was in when war began

24:25

a will in a a the in change world

24:28

a , the war a a a a change

24:30

a as change will in as will in a a

24:32

will the a a the change will the

24:35

a a in the world in will a

24:37

the a in a in the change as a a a

24:39

as a and the will a a

24:41

the a as a a as a the

24:44

in a as a in the a

24:46

in a in a in a

24:49

a change and a a change the

24:51

the change a a as and a a a

24:53

the a the as in world and the

24:56

a in a a and and will

24:58

and in change change the war the as change

25:00

war and the will a and a will

25:02

in and a and the war change

25:05

change the and change in

25:07

the as a a change as as

25:10

a the war as world the a

25:12

change a change will a

25:14

and as a as the in a a as a

25:16

a the a will in a change

25:19

in a a as will and a a

25:21

in and a will and a world

25:23

a change a the world will

25:25

as a a a the the change

25:28

a will in as a and change

25:30

a the will the will as the war and

25:32

as a as the and and a the

25:35

a will the a change

25:37

the change a a will and as in and

25:39

a the change the will as and

25:41

a the in the will a a

25:44

a a as a the change

25:46

and a a will the a as change as

25:48

a the the and in

25:51

a will change change will a

25:53

as and a change a a

25:56

change the as and the a a a

25:58

change as a marshall plan

26:00

was far smaller than will we will need to

26:02

do in fact we've already done in marshall plan to

26:04

ukraine's marshall plan i mentioned

26:07

aid after , thirteen

26:09

twenty fourteen and it didn't work in the sense

26:11

didn't transform ukraine's economic prospects

26:13

a now we've had a war now

26:15

bigger have to go even bigger there's no doubt at all

26:17

about that the scale of the aid will be we're

26:20

probably talking we're hundred billion euros minimum

26:23

that is the sort money for instance the the e

26:25

u contemplate spending on poland over

26:27

the next seven years will so in the multiannual

26:29

budget framework so we're

26:31

talking a bit like with nato de facto

26:34

e u membership on

26:36

the sort of scale of aid that

26:39

eu receive through structural adjustment and regional

26:41

funding within the eu for a non

26:43

eu member i think that's the

26:45

, and that is very large scale it's a

26:47

huge commitment both institutional political

26:50

and financial and will require some pretty

26:52

tough choices in brussels i think because because

26:55

military aid is overwhelmingly coming from the us

26:57

but there's no reason to expect

26:59

that american political system will maintain

27:01

a long term civilian aid program

27:03

for ukraine that itself that interesting eu think

27:05

it's that humanitarian course but in

27:07

economic sense problem that's going come back

27:10

to europe step step rather than

27:12

the to financial by us

27:14

treasury and whoever than the white will

27:16

let's be imf and the world bank may help and that's

27:18

probably the way in which america which has preponderant

27:21

vote and both will support this

27:24

but it is on europe's doorstep it's exactly

27:26

the sort of strategy that russell's really

27:28

was inching its way towards for the

27:30

last decade and now i think needs to embrace

27:33

problem of course is it has to be then reciprocated

27:35

on the ukrainian side that's turn

27:37

to russia's economy and

27:39

russia's and wide raft

27:42

to

27:42

sanctions and ,

27:45

he seems to be reasonably

27:47

resilient why you think

27:49

that is is that simply that rushes economy

27:52

which is always gets bad rap when it's

27:54

reviewed is actually secure

27:56

than many expected think

27:58

we should ever

28:00

no huge to the extent we we're about the

28:02

robustness of a big sophisticated economy

28:04

like rushes the the only have to look at the example

28:06

of iran which has been living for us

28:09

under sanctions they don't

28:11

impose right these a very sophisticated societies

28:13

has struggle improvises

28:16

substitute figure out alternatives

28:18

and and make a go of it first of we see a huge

28:20

impact which what we're going to see somewhere between

28:22

five ten and fifteen percent falling

28:24

variety would not be surprising this year think we're

28:26

tending now towards the lower end of that spectrum

28:29

and , the real question is come the economy come

28:31

back and what rate can grow at we

28:33

also have to differentiate between the financial

28:36

sector which took a huge hit under the impact

28:38

the central bank sanctions but then subsequently

28:40

has stabilized then that cause you just impose

28:42

variety financial restrictions and then the financial

28:45

system starts stabilizing

28:47

it doesn't then allow growth but it will at

28:49

least no longer bear source of crisis

28:51

then of the then economy which is

28:53

suffering from a very severe

28:55

restriction of imports and i think the

28:57

russian experts expect that to really begin

29:00

to bite in the third and fourth quarter of this

29:02

year then the other thing we have to bear in mind

29:04

is the rushes energy exports a continuing

29:06

right so they continue to earn maybe

29:08

as much as a billion dollars a day by selling

29:10

oil gas to the world

29:12

and russia is turning china in india

29:15

to expand trade routes

29:17

will mean the is less dependent

29:20

on western markets to what

29:22

extent can it hope to offset damage

29:24

to its economy in that way

29:27

in the short run it's a poor substitute

29:29

in the longer on it's less

29:31

of painful trade of especially with regard to

29:33

it's major exports of energy and

29:35

with gas in particular with regard europe it's

29:37

clear that long run europe was on the decarbonisation

29:40

path anyway under growth markets run asia

29:42

under any scenario even the most greenest

29:44

of scenarios the , sales

29:46

in oil is a huge fungal market they'll find

29:48

people they'll buy their on to discount in any

29:51

scenario more broadly i

29:53

think the real issue the real russia have

29:55

a future something other than commodity supplier

29:57

to whoever will buy that stuff and

30:00

that's where the real pain is i think and that's where you

30:02

also see the desperation of the russian middle

30:04

and upper middle class whom many of whom of emigrated

30:07

because , no longer see a

30:09

future for their russia in

30:12

essentially being essentially second tier

30:14

raw material supplier to asia that

30:16

is the prospect

30:17

economist is written about

30:20

the war in ukraine accelerating

30:22

world's division into economic

30:24

blocs and russia looking war

30:26

eastwards while the west we'll have

30:28

to trade more with geopolitical

30:30

allies and that globalization

30:33

that we've evolving writing have about

30:35

thinking about for so long is

30:37

that the way that you see things evolving

30:40

and not convinced the the i do block

30:43

is going be terribly helpful in the because their

30:45

seem to me to imply of kind of clarity

30:47

of to vision and , of

30:49

the different parts within the world's

30:51

power structure in terms of hard

30:54

power takes of power finance

30:56

world materials and so and on aligning

30:59

aligning takes block which

31:02

is the sort of called war mode will their of you're in the

31:04

on the western side you get you're gain and you're

31:06

from saudi arabia whatever of you're on the soviet

31:08

side you get it from russia so on type on that

31:10

kind of segmentation what

31:13

i see more series of sort of polarized

31:15

overlapping networks in

31:17

which power is expressed differentially

31:19

depending on the type of network talking

31:21

about so to be can be when

31:23

base going to asia what is looking

31:26

to do somehow align the economic

31:28

with the military and political security

31:30

power united states is trying create and having

31:32

and incredibly hard time incredibly it because

31:35

it's not clear that america can any longer

31:37

articulate a trade base block

31:39

with asia it doesn't have the called because of

31:42

american domestic politics so instead

31:44

what think which to see is i security

31:46

policy alignment of asia with united

31:49

states and on the other hand other trade

31:51

policy alignment through structures of

31:53

see be the be trade of see in which takes

31:55

the more towards china because of the dynamo

31:58

china's economic when

32:00

a resumes and i think there is a presumption

32:02

that even if it takes a hit it will some

32:04

point resume at a pace of maybe four five

32:06

per cent per annum which still very considerable

32:09

so i think that to me is the complexity

32:11

here is polarization yes

32:14

increasing tension yes but not

32:16

a neat division into segments along

32:19

the cold war lines

32:20

we've talked about how the war will affect europe

32:22

and to the west west about other countries

32:25

around world sending you've raised

32:27

concern about the be to crisis

32:30

and particular countries like tunisia

32:32

and sri lanka and a lot

32:34

of those countries and regions will

32:36

be sending people to davos

32:39

trying to bang the table and say look forget

32:41

us in our big sweeping overviews

32:43

will the world economy we are apt to forget

32:46

differentiated can the and we've and this of

32:48

economy development and can have algerian

32:51

and universe years site by site and north afri

32:53

to now algerian is experiencing

32:55

a sudden and unexpected gasp prices

32:57

food and is rising which a couple

32:59

of years ago the economist was writing very alarming

33:02

reports that algerian very food respond it

33:04

, as though is writing from food is

33:07

is used it by gasp extent

33:09

most energy which doesn't have the benefit most

33:11

same extent is now i think under very

33:13

seven at will and domestic political

33:15

pressure so i think that's what we've really got

33:17

to develop a read are food is

33:19

this and need this web is it the the

33:21

combination of rising energy prices

33:24

rising food prices and rising interest

33:26

rates though the doesn't interest

33:28

rates from to of and interest rates is going to

33:30

exert the most pressure a need same

33:33

policy pressure across the world

33:35

economy and very by read and ago

33:38

going away from this idea of blog towards

33:40

more differentiated view and

33:43

policy makers policy think especially at the world by

33:45

the i them as need to be equipped with

33:47

the resources that allow them to respond flexibly

33:49

to the crisis we need to have liquidity

33:52

facilities in prices to away prices

33:54

writing see is writing see temporary crisis

33:57

in to crisis which really to very

34:00

is damage to prospect

34:06

that was historian and economist adam change

34:09

into his crystal ball to assess the future

34:11

of the world economy

34:13

and to finish special show from davos i

34:15

wanted get final thoughts from patrick vows

34:18

the economist business affairs editor and

34:20

vows finish and vows our finance

34:22

and economics editor patrick

34:25

what do you think

34:26

the lot time inflation of

34:28

ukraine will be on the world

34:30

economy works a the

34:32

three time immediate

34:34

, inflation shock which happening right not

34:38

severe problem second is

34:40

a supply chain adjustment that's happening

34:42

starting think is going to accelerate people

34:44

had the trade war to the a

34:47

war and ukraine on companies are really

34:49

of beginning to try and come up with plan be to

34:51

organize themselves to be more resilient not

34:54

really big change that potentially alters how the world

34:56

economy works compared the last twenty

34:58

is think the furthest her

35:00

right and is the impact of sanctions actually because

35:03

russian is because partially cut of the

35:05

ukrainians present the lenski demanding

35:07

either time is sanctions from the

35:09

west on think a lot of countries the

35:11

on not aligned on either side

35:14

or on either russian side like china

35:16

are going to be thinking very carefully about how to redesign

35:19

the financial systems to meteor systems

35:21

or completely protect yourself from

35:23

western sanctions that take ten years b

35:25

is very big ruth the question whether

35:28

war in ukraine as well as the cave

35:30

nineteen pandemic of sound of the death now for globalization

35:33

looms large event here

35:35

this year do you think

35:38

it pass the end globalization

35:41

we knew it

35:42

the death now the globalization has in wrong

35:44

so many times that am not sure i want do it again

35:47

but i make couple observations one

35:49

is the point about the resilience

35:51

supply change that patrick mentioned since

35:54

donald trump initiated his trade war against china

35:56

people that been talking about this something that might

35:58

happen that supply change might be altered

36:00

and for few years felt like people

36:02

talking about this but nothing was really happening what i found

36:04

really striking from altered meetings here davos

36:06

was just getting a sense that now

36:09

this now this starting happen that businesses

36:11

all starting think about this bankers all seeing

36:13

this sort of activity happening then that's

36:15

one sense in which globalization is we know it

36:17

might be changing and then who's

36:19

here is something that's really struck me

36:21

so we haven't seen that many chinese obviously

36:24

know russians here but you we've seen

36:26

indians out in full force you know when

36:28

you walk down the main streets there are sort

36:30

of kiosk after kiosk the many

36:33

of the indian states wanting to get more investment

36:35

that lots of indian companies here lots indonesians

36:37

here so maybe that tells you something about

36:39

how the face

36:41

i change might be changing we met

36:43

one indian tycoon who complained the too

36:45

many indians around and were and

36:47

were americans so you're

36:49

definitely right the

36:50

last time i was here it was twenty twenty

36:53

the economist asks pondered whether

36:55

world still needs doves how's

36:57

twenty twenty proven it desert

37:00

doesn't

37:01

i think it's probably had a pretty bad stress

37:03

test the pandemic prevented travel

37:06

the geopolitics mean does

37:08

huge disagreements and at the end of the

37:10

day still happening possibly

37:12

slightly smaller scale with a little bit less

37:14

pomp and possibly even

37:16

a little less insincere public

37:19

comments by people virtual signaling but

37:21

it's still here it's still happening and i think

37:23

that probably does suggest it's going be around for while

37:25

longer thank you very much indeed for

37:27

joining me patrick that and that thanks

37:30

to to the the friedman two

37:35

what i'd be curious to know will you

37:37

think what would your priorities be if

37:39

you had the main stage at davos write

37:42

to us podcasts as economist do com

37:44

all you can tweet us a the economist

37:47

all show draws to close so to

37:49

does another world economic forum and

37:52

pandemics permitting the pandemics listers

37:54

from politics business culture will

37:56

return to switzerland to do it all

37:58

again next year in usual january

38:01

gathering but why exactly

38:04

does this tiny mountain nation punch

38:06

far above its weight in business this

38:08

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38:11

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38:25

producer is the barrell the executive

38:28

producer is harriet noble and

38:30

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38:32

the calvo and from davis this

38:34

davis the economist