The World

Mood: The improvement in optimism at Davos is palpable from last year, as I argued before. Interestingly, the group showing the greatest caution seems to be the CEOs of non-financial corporates. My experience over the years is that these people are a lagging indicator. What drives them is their recent performance. However, there seems to me to be a real return of confidence among bankers, who are back in force. That does make me quite nervous.

Smart point: Perhaps the most interesting point I have heard is about the social and political impact of new technologies. The idea, in essence, is that political behaviour, in our wireless-enabled world, is becoming just like financial markets: speedy and speculative. To put it more neutrally, herd behaviour is, for good and ill, becoming as characteristic of political and social behaviour as it has long been of financial behaviour. Of course, this is not exactly new. But it is faster and more powerful. I don’t know whether this is true. But it is intriguing.

Emerging countries: The general mood about emerging countries is very positive. That is no surprise. The high-income countries are viewed with some contempt. But, interestingly, at a panel I moderated, organised by “India !inclusive (sic)”, my friend Montek Singh Ahluwalia, deputy chairman of the planning commission and one of the architects of Indian reforms, pointed out that Brazil had attained 10 per cent annual growth rates in the 1960s and early 1970s, only to fall into low growth and huge debt problems for two and a half decades. The general consensus, however, was that Indian growth would continue to be rapid. But it is obvious to anybody that maintaining growth at current rates will require massive improvements in infrastructure, the performance of government and provision of education services. An interesting part of that debate was the concern expressed about the environmental consequences of growth.

FDI in India: My Indian panel included Doug McMillon, president of Walmart International, and Elizabeth Comstock, chief marketing officer of GE. Both indicated a strong desire to expand their businesses in India, to serve the Indian market. In the case of GE, an important feature is the hope that Indian innovations can be turned into products for sale across the world. The shift in the locus of innovation might prove very important.

US and Europe: There seems to be a widely held view that US growth will be 3-4 per cent this year. Tim Geithner, US treasury secretary, certainly put up a relaxed performance in his interview with Charlie Rose, a well-known US TV interviewer. (Admission: I have appeared on this excellent programme several times.) This is the first time Mr Geithner has come here as treasury secretary. That says something in itself.
There is also a view that the Europeans have finally decided not to let their crisis roll on unchecked. Beyond doubt, they can still stop it, if they wish. But the will to do so has remained uncertain. To me the even bigger question is whether the damaged countries can return to growth. It is the denominator (GDP), stupid!

Unemployment: Again and again, I have heard Davos man (it is still overwhelmingly male) worrying about unemployment. Will he do anything useful about it? Probably not.

Tomorrow: I will be moderating the Economic Outlook session. I am looking forward to it.