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Davos 2017 Takes Place amid a New World ‘Disorder’
Source: http://www.cnbc.com/
Source Date: Tuesday, January 10, 2017
Focus: Knowledge Management in Government
Created: Jan 18, 2017

Business and political leaders across the world are getting ready for this year's Davos edition, but the political context in which they will be meeting is completely new.

Following the election of Donald Trump in the U.S. and the British vote to leave the EU, companies are taking a more "defensive" approach. At the same time, experts believe that China will strengthen its influence as a world power as the U.S. takes a more protectionist view.

"Corporations, if you will, I think they are going to be on the defensive potentially on the back foot at Davos for the first time in a long time," John Studzinski, vice chairman of Blackstone, told CNBC on Tuesday.

According to Studzinski, there has been a "drastic policy shift from 2008, which was very much an international financial crisis to today where you have people and governments focusing on challenging the status quo and going from big international concerns to pure domestic populist issues."

A surge in support for populist views was evident in 2016 and populism continues to dominate market concerns going into 2017. The surprising votes in Britain and the U.S. caused some market turmoil, but above all they raised uncertainty regarding their next policy directions.

For example, the intention of President-elect Trump  to withdraw from a trade agreement signed with Asian Pacific countries raises uncertainty for companies that were set to increase business with those countries.

In Europe, businesses from the retail sector to banking are unsure how their current partnerships with U.K-based firms will be, and vice-versa, once the U.K. government begins its exit negotiations.

"Market volatility this year is much more driven by uncertainties driven by the new cast of leadership that the world has been presented with," Studzinski said.

Upcoming elections across Europe could alter the political landscape. The Netherlands, France and Germany have elections scheduled in the coming months but more ballots could be called in 2017 across the EU.

Mark Malloch-Brown, senior adviser at Eurasia, described the current global environment as a new world "disorder" with new influencers shaping the present and future.

"The story of 2017 is going to be China's growing influence and ascension of its power," Malloch-Brown told CNBC on Tuesday.

Data released Tuesday showed that the Chinese economy is performing above expectations. Producer prices rose to a five-year high in December.

"The fact that president Xi is opening Davos is a strong statement that China sees himself as front and center on the world stage today," Studzinski of Blackstone added.

Xi is the first ever Chinese president to attend the World Economic Forum at Davos.

Studzinski also recognized that political parties could no longer rely on voters backing the status quo.

"We have to be very honest about this. Donald Trump was elected because he was Donald Trump. Marine Le Pen might be elected because she is Marine Le Pen…Donald Trump wasn't elected because of his policies, he was elected because he was an interesting, changing-agent, personality and perceived leader," Studzinski said.

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