Davos predictions: win some, lose some

Head of the International Monetary Fund Christine Lagarde, right, gestures as she speaks while Governor of the Bank of England Mark J. Carney, sits next to her during a session at the World Economic Forum in Davos, Switzerland, Saturday, Jan. 25, 2014. (AP Photo)

As the world's business and political elite ascends the Swiss Alps for an annual bout of crystal-ball gazing this week, history suggests the Davos pundits are likely to get plenty of things wrong.

More than 1,500 business leaders and 40 heads of state or government will attend the Jan. 21-24 meeting of the World Economic Forum (WEF) to network and discuss big themes, from the price of oil to the future of the Internet.

This year they are meeting in the midst of upheaval, with security forces on heightened alert after attacks in Paris, the European Central Bank considering a radical government bond-buying program and the safe-haven Swiss franc rocketing.

The mountain air encourages confident pronouncements but the accuracy of Davos predictions has been mixed in recent years.

Dud forecasts from last year include Bank of Japan chief Haruhiko Kuroda declaring the situation in his country was “completely changed”. Twelve months on, Japan's economy is back in recession.

And no-one last year saw Russia's annexation of Crimea, the rise of Islamic State or oil at $50 a barrel.

The twin crises in the euro zone and the banking sector have also been notorious for wrong-footing policymakers and pundits.

In 2011 the French finance minister at the time, Christine Lagarde, declared the euro zone had “turned the corner” and told financial markets not to “short Europe”. The bloc went on to have an awful year in which short-selling would have been a decidedly smart tactic.

In 2012 the tables were turned when economist Nouriel Roubini, nicknamed Dr Doom after he forecast the U.S. sub-prime mortgage crisis, predicted that Greece would leave the euro within a year. It didn't happen, though “Grexit” talk is back on the agenda in time for this year's Davos.

 

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Last Update: Wednesday, 20 May 2020 KSA 09:43 - GMT 06:43
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