The Davos predictions that did not work out

The World Economic Forum in Davos, Switzerland, begins next week. It is an annual meeting where the global elite of business leaders, politicians and economists make bold predictions and try to set the agenda for the coming year – but they are not always right.

Here’s a rundown of some of the calls we’ve made in recent years.

The fate of Europe’s economy became a concern at the WEF’s May 2022 annual meeting, following Russia’s invasion of Ukraine.

Citigroup CEO Jane Fraser said on the panel, “I think more about Europe, it’s in the middle of a storm from the supply chain, from the energy crisis, and just so close to some of the atrocities that happened in Ukraine.”

When asked if there was going to be a recession in Europe, Fraser gave a definitive answer: “Yes – and I hope I’m wrong.”

Although the region’s growth rate has been hit and inflation has risen, the EU has so far escaped recession. Some analysts predict it will be in early 2023, but expect it to be “light.” Berenberg, for example, expects GDP (gross domestic product) to fall by 0.1% in the eurozone this year.

But Goldman Sachs has raised its outlook on the region, saying this week it no longer forecasts a recession for the euro area.

“We maintain our view that the growth of the euro area will be weak during the winter months due to the energy crisis but we are not looking for a technical recession again. This reflects the more durable growth momentum at the end of last year, lower natural gas prices and China before. reopening,” Goldman analysts said in a note.

They indicated a GDP growth rate of 0.6% for 2023, compared to consensus expectations for a contraction of 0.1%.

Billionaire investor George Soros warned during a speech at Davos in 2018 that the United States could end up in a nuclear war with North Korea.

“The United States is set on the path to nuclear war by refusing to accept it [North] Korea has become a nuclear power,” he said at the time.

The Obama administration also said back in 2016 that it was the highest national security risk.

So far, the United States has avoided a military conflict with North Korea. In fact, recent concerns along these lines have focused on Russia, due to its invasion of Ukraine.

Cryptocurrency is huge in 2022, but those in the market don’t expect the collapse of FTX – that $32 billion crypto exchange.

Brett Harrison, who is president of FTX US, told CNBC in Davos in 2022 that the company is at a “very good point” in terms of capital and looking at acquisitions.

US authorities arrested Sam Bankman-Fried, the former CEO, in December, and charged him with wire fraud, securities fraud and money laundering. Bankman-Fried has pleaded not guilty.

In 2019, Jeff Schumacher, founder of BCG Digital Ventures, said during a panel held by CNBC in Davos that the price of bitcoin could fall to zero.

Bitcoin has been volatile, but in 2021 and 2022 it has reached a higher level than seen in 2019. After that it has fallen from the historical high, but the trading level this week is still above that of four years ago.

At WEF 2020, German Finance Minister Olaf Scholz said he was confident a trade deal between the United States and the European Union would be reached. Scholz, who is now chancellor of the state, said at the time: “In the end, we know that trade is most successful if there are not too many obstacles.”

Both sides of the Atlantic have resolved several trade disputes since US President Joe Biden took office in 2021 – but are still far from a comprehensive trade deal.

In fact, European countries are already worried about Biden’s Inflation Reduction Act, arguing that it discriminates against European companies and does not follow international trade rules.

Although media reports in 2022 indicated that Credit Suisse was considering replacing CEO Thomas Gottstein, when CNBC asked Credit Suisse chairman Axel Lehmann about it in Davos, he denied the report.

“They didn’t talk to me and I knew it hadn’t happened, so it was wrong,” he said.

The Swiss bank announced in July that Thomas Gottstein was resigning.