The economic outlook as seen from Davos

There are always some amazing panel sessions at Davos, and luckily we mere mortals can tune in via the World Economic Forum website. One of the heavy-duty sessions was about the economic outlook for 2012; with participation from a handful of the central players determining what will happen.

Martin Wolf, of the Financial Times chaired the panel, and started off with a few salient points to set the stage for the discussion.

He started out by observing that "The mood in Davos is that people are feeling relief in the way that somebody who has just been reprieved form hanging feels a relief. In stead of feeling the immanent prospects of catastrophe, there is a sense that things have been done which have eliminated very substantially the immediate risk of disaster, particularly in Europe, particularly because of the activities of European central bank, although not exclusively so. And that therefore we can start to think about the slightly longer term, which means the next few months, or perhaps even longer.

Martin Wolf then pointed out that the current economic crisis has been going on for nearly 4,5 years now, and by the time we reach September, according to IMF's forecasts, Chinas economy will have expanded by 60 percent over the past 5 years, the Asian developing and emerging countries, which are half the worlds population will have expanded by 50 %, the emerging world by about 35% and the developed world by essentially zero. So these 5 years will have seen the most extraordinary and unprecedented speed of transformation of the relative weight of countries.