The World Economic Forum may be returning to its long-standing ritual of meeting in Davos, Switzerland, in January, but—even as the pandemic ebbs—this is still a time of remarkable upheaval. WEF founder Klaus Schwab sat down in New York City with TIME’s editor-in-chief Edward Felsenthal to discuss what’s ahead for Davos and the global economy.
A couple of times when we’ve had these conversations, I’ve asked you about what the impact of a real economic downturn might be on the tension between stakeholders and shareholders. And here we are, with the economy facing some real headwinds. Do you see any retreat from the movement toward stakeholder capitalism?
I think it’s the wrong approach, from the beginning on, to create a choice between shareholder capitalism vs. stakeholder capitalism. The company is not just an economic unit: it’s a social organism, which has to play its role inside society. This generation expects from a company not just to serve shareholders, but to take care of people and the planet. The company who keeps this in mind will have much better talent in the future and will have much higher attractivity with its customers.
But there is some tension. You can’t fully take care of your people if you’re laying off 13,000 workers.
No, in your practical decisions as a CEO, you have to make compromises. At a certain moment, the balance may shift more to the short term—which is to emphasize, let’s say, the profitability of the company. And other times it may shift more to the long term.
There aren’t many people in the world who talk regularly to as many CEOs and world leaders as you do. What are you hearing and feeling about the economic outlook for ’23?
I wouldn’t relate it only to ’23. We are in a restructuring of the global economy. When you have a restructuring in a company, you write off the costs on your balance sheet, and shareholders are suffering and sometimes employees have to go. But when you have a restructuring of an economy, it bites into the purchasing power of the people. We should not look at the global economy with a crisis mindset and a short-term approach. We have to manage in a strategic way this transformation period, which may last three, four, five years and will be socially very painful.
The company is not just an economic unit: it’s a social organism.
You made the unprecedented decision last year to ban Russia from Davos.
We immediately followed the global sanction policies, so we froze all our relationships with Russia.
And that continues?
That continues.
The first time I came into contact with the crypto world at all was at Davos. After the collapse of FTX and the broader challenges over the past four or five months, what do you make of that market?
I’m a big fan of new technologies, so we [at the World Economic Forum] were always very engaged in the development of crypto. But it’s a fact that technological development is so complex and so fast, that sometimes it’s very difficult for political [institutions] to comprehend the significance of a certain new development, and even more difficult to create the necessary boundaries around it. So I’m not surprised about what happened. Crypto will remain. But now we have to make sure crypto is integrated into, or at least made congruent with, our traditional systems.
Now you’re working on bringing the World Economic Forum into the metaverse.
A year ago, when Meta had changed its name, I became curious what [the metaverse] is and could it have an impact, as you did with crypto. So I asked many people, What does it really mean? Everybody gave to me a different answer. And for me, it became very clear: it’s the capability to meet in a virtual three-dimensional room. I mean, you have two levels. First is just to meet around a table with your avatars. And second, is to combine it with an immersive experience—and that’s what we will do in Davos.
We will showcase in Davos what we call the Global Collaboration Village and inaugurate it in the summer next year. This has such an importance because it can make global collaboration more open; you always can convene the most relevant and the most knowledgeable people. And second, it makes it more sustained, because you can work together on a continued basis, and not just come together for a physical meeting and then nothing happens for quite some time again. We created a community, which has at the moment 70 members, whom we call Village Partners, who support us. [Salesforce, whose chair and CEO is TIME’s co-owner Marc Benioff, is a Village Partner.] I feel this could be a game changer in global collaboration.
What brings you optimism in this challenging time?
I’m always an optimist—and if I tend to become a pessimist, I just think of my mentor Shimon Peres, who explained in Davos once the difference between optimists and pessimists: both, in principle, have the same lives, but optimists have a much happier life. This situation which we are in now is not the worst of all the times. It’s a bad one. But at the end, change is what’s happening. We can manage change.
This interview has been edited for length and clarity
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
