Forum Delegates Are Anxious About World Economy
RENEE MONTAGNE, HOST:
The sanctions against Iran are among the topics of discussion in Davos, Switzerland. That's the ski resort where world leaders, powerful executives and other influential people meet each year for the World Economic Forum. Many economists are there, too, including Nariman Behravesh. He's chief economist at IHS Global Insight, and we reached him at Davos. Thanks for joining us.
NARIMAN BEHRAVESH: Thank you.
MONTAGNE: Well, so this year, you know, many issues, as always - in this case, Greece still on the brink. Europe is staring at a recession. How would you describe the mood there?
BEHRAVESH: Well, it's certainly a lot less upbeat than last year. I think there's a lot of anxiety here, a lot of it focused, as you say, on Europe. But there's also anxiety about China, anxiety about Iran and the potential for a conflict in the Persian Gulf and, of course, the impact that that would have on oil prices. So, in a word, I think the delegates are quite anxious.
MONTAGNE: You know, there has been criticism about governments not taking enough of a long view. Now Germany's Chancellor Angela Merkel is asking business leaders at Davos to give Europe the time it needs to work out its debt crisis. But is that realistic? I mean, is there patience for that?
BEHRAVESH: Well, the fact that this crisis has been going on now over two years, I think it's a little disingenuous for Merkel to be asking for even more patience. And the problem is that they really haven't done enough to deal with the current crisis. And so I find that sort of statement just a little hard to swallow.
MONTAGNE: Well, what are the key things, then, you are hearing? You say it's not just Greece. It's not just Europe. It's other regions of the world. What are you hearing that maybe even surprises you?
BEHRAVESH: There's an interesting dichotomy, here. What you've got is a lot of business leaders feel reasonably good about their own businesses, but they're very, very worried about what's going on around them in terms of the macro economy, in terms of other industries. So the kinds of questions you're hearing are: Are you OK? You know, what are your plans for 2012?
For example, oil and gas, I mean, they're obviously doing well. Oil price is quite high, but they're very worried about China. China hard-landing, for example, would push oil prices down to $50, $60 a barrel. So that's the kind of anxiety that they would have in that industry.
Another one is the chemicals industry. They're doing extremely well, especially in the United States, but again, worried about a recession in the U.S. - not that it's likely, but that, you know, it might happen. So that's the way I would sort of view this sort of balancing act, you know, feeling good about the industry, but worried about sort of the bigger picture.
MONTAGNE: Now, every year there are protests at Davos. I understand this year, just a mile or two away from the posh lodgings there, protesters from the Occupy movement have built igloos. You know, Davos is the gathering of many successful, wealthy people. Are there concerns about income inequality at Davos?
BEHRAVESH: The answer is yes. There are lots of panels here in Davos about income inequality, wealth inequality, what to do about it. Obviously, there's a lot of debate and discussion about President Obama's State of the Union speech and the fact that it focused quite a bit on this very issue.
The Occupy Davos movement itself isn't resonating that much here, but they're discussing more investment in education, for example, changes in U.S. tax law. So there are substantive discussions. It's not just sort of hand-ringing. It's more than that.
MONTAGNE: Nariman Behravesh is chief economist at IHS Global Insight, speaking to us from Davos, Switzerland. Thanks very much.
BEHRAVESH: My pleasure.
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