Valdis DombrowskisEU trade chief warns against fatigue over Ukraine war.
Sanctions are working, Dombrowski Tell Davos, predict Russia’s downturn will continue.
“If we look at it, the Russian economy was in recession last year and will be in a deeper recession this year.”
Dombrowski Russia’s economy has been boosted by record-high energy prices due to the fallout from the war in Ukraine.
Sanctions are having a cumulative effect, with personal, trade and economic restrictions working together, he said.
Putting pressure on Russia’s energy sector through sanctions is important, Dombrovskis continued, saying “we were a bit late” when the European Union imposed an oil embargo on Russia and the G7 capped oil prices.
“It’s very important to stay the course,” he concluded.
Davos heard this morning that sanctions on Russia are playing a vital role in the war in Ukraine.
Ken RogoffThe Harvard economics professor told delegates that while the war would be decided by military action, the sanctions had a major impact on the Russian economy.
RussiaRogoff said, was heading toward becoming Cuba, Venezuela, and perhaps a giant Iran — incredibly impoverished compared to what the Russians were used to.
Rogoff believes Russia’s economy is weaker than official statistics and said he doesn’t believe anything Russia says in terms of numbers.
Rogoff pointed to underemployment and fiscal revenues showing a slowdown in manufacturing and other parts of the economy.
Rogof explained that the most important sanctions are those that slow down the Russian military machine. He suggested that the gray market should be further cracked down on because chips in consumer devices can be repurposed for military purposes.
I would definitely not come to the conclusion that sanctions don’t work. They are second only to military intervention, but they are absolutely important, Rogoff insists.
He also said there were examples where sanctions could achieve regime change, such as in South Africa under apartheid.
“If you keep sanctions in place for a long time and make them stronger and stronger, they work”
Good morning Davos, the final day of the World Economic Forum is underway.
Hopes that the world economy may suffer only a mild recession will be tested today when top central bankers and policymakers assess the situation.
Christalina GeorgievaManaging Director of the International Monetary Fund, Christine LagardePresident of the European Central Bank, Governor of the Bank of Japan Kuroda Haruhiko All appear on economic outlook panel with French finance minister Mayor Bruno and professor lawrence summers.
They will start at 11am Davos time (10am UK) to discuss the future of growth and the policies needed to stabilize the global economy.
The rumor here is that the world economy may pick up in the second half of the year.
More households and firms are facing economic distress, even as opinion polls show clear pessimism among business leaders and economists and there are signs that the global growth engine is slowing.
After Keir Starmer and Rachel Reeves attended Davos yesterday, Davos delegates were also pondering how the UK’s economic future might look under a future Labor government. How will change.
Starmer condemned Rishi Sunak’s decision not to attend Davos – which some in Davos see as the chancellor’s mistake.
A business person told us yesterday:
“Rishi was chained and decided not to come last year when it didn’t feel feasible. Things have changed.
Rishi would steal the whole show.
“Starmer and Reeves have set the tone well. They’re here to promote themselves, but they’re doing it under the pretense of promoting Britain, which is filling the vacuum left by Rishi.”
The message to Davos from Labor heavyweights is that Britain will be “open for business” as they try to lure world leaders and chief executives with reassuring messages.
They also brushed shoulders with the elite of the World Economic Forum last night at JP Morgan’s party on the Davos Promenade, where Xingmo to chat with Tony Blair and Jamie Dimon.
Russia’s economic outlook and the impact of artificial intelligence are also on today’s agenda.
Davos 9am / 8am GMT: Panel session on AI and white collar jobs
Davos 9am/8am GMT: Panel session on mapping Russia’s economic trajectory
10.15am Davos / 9.15am UK: Panel session on call to action for youth
Davos 11am / 10am GMT: Global economic outlook: Is this the end of an era?