The predictions from Davos did not work out

The Swiss ski resort of Davos hosts the annual meeting of the World Economic Forum.

Harold Cunningham | News from Getty Images | Getty Images

The World Economic Forum in Davos, Switzerland, begins next week. It’s an annual gathering where a global elite of business leaders, politicians and economists make bold predictions and attempt to set the agenda for the year ahead – but they’re not always right.

Here’s a recap of some of the calls that have been made over the last few years.

European recession

The fate of Europe’s economy was a major concern at the WEF annual meeting in May 2022 following the Russian invasion of Ukraine.

Citigroup CEO Jane Fraser said at a panel: “I think Europe is much more worrying as it is in the middle of the supply chain storms, the energy crisis and just close to some of the atrocities taking place in Ukraine.”

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

Despite the region’s growth rate taking a hit and inflation soaring, the EU has so far avoided a recession. A number of analysts are predicting there will be one in early 2023 but expect it to be “mild”. Berenberg expects GDP (gross domestic product) in the euro zone to fall by 0.1% this year.

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

“We maintain our view that euro area growth will be weak over the winter months given the energy crisis, but no longer expect a technical recession. This reflects more resilient growth momentum late last year, sharply lower natural gas prices and early China reopening,” Goldman analysts said in the note.

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

nuclear war

Billionaire investor George Soros warned during a speech in Davos in 2018 that the United States could be headed for a nuclear war with North Korea – without giving a timeline for a possible confrontation.

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

The Obama administration said back in 2016 that this was a major national security risk.

So far, the United States has avoided any military conflict with North Korea. In fact, recent concerns in this direction have centered on Russia following its invasion of Ukraine. A spokesman for Soros emailed CNBC that there was still a looming threat of nuclear war, citing recent comments from South Korean President Yoon Suk-yeol.

FTX crash

The cryptocurrency has been rocky throughout 2022, but market participants didn’t anticipate the collapse of FTX — a once $32 billion crypto exchange.

Brett Harrison, who served as president of FTX US, told CNBC in Davos in 2022 that the company was in a “very good position” in terms of capital and was considering acquisitions.

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

Bitcoin goes to zero?

In 2019, Jeff Schumacher, founder of BCG Digital Ventures, said during a panel hosted by CNBC in Davos that Bitcoin’s price could go to zero.

Bitcoin has had a volatile run, but in 2021 and 2022 it reached levels well above those of 2019. It has since fallen from its all-time highs, but its trading level this week is still above where it was four years ago.

Trade agreement between the US and the EU

At the WEF 2020, then-German Finance Minister Olaf Scholz said he was confident there would be a trade deal between the United States and the European Union. Today’s Chancellor Scholz said at the time: “After all, we know that trade is most successful when there are not too many barriers.”

Both sides of the Atlantic have settled some trade disputes since US President Joe Biden took office in 2021 – but they still appear to be a long way from a comprehensive trade deal.

Indeed, European countries have raised concerns about Biden’s anti-inflation law, arguing that it discriminates against European companies and does not follow international trade rules.

Restructuring at Credit Suisse

Despite media reports in 2022 suggesting that Credit Suisse was considering replacing then-CEO Thomas Gottstein, when CNBC asked Credit Suisse Chairman Axel Lehmann about it in Davos, CNBC denied the reports.

“They didn’t speak to me and I know that didn’t happen, so it’s wrong,” he said.

The Swiss bank announced the resignation of Thomas Gottstein in July.

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