CEOs Show Optimism at Davos, Despite Gloomy Data
January 21 2020 - 11:50AM
Dow Jones News
By Chip Cummins and Marie Beaudette
DAVOS, Switzerland -- Chief executives converged here hopeful
that easing trade tensions around the world could give the economy
a boost, despite some early dismal forecasts for global growth and
business sentiment.
A closely followed survey of CEO sentiment kicked off this
year's World Economic Forum on a somber note. Consulting firm PwC
found that 53% of those it surveyed predict a slowdown in economic
growth in 2020, up sharply from 29% in 2019 and 5% in 2018. It was
the highest level of pessimism since 2012, the first year of the
survey, PwC said. The OECD predicts global growth of 3% this year,
up only slightly from its 2.9% forecast for 2019 -- the weakest
growth rate since the financial crisis.
Still, CEOs of several multinationals greeted President Trump's
recent phase-one trade deal with China, which he lauded in his
opening speech Tuesday, as a sign of more certainty around trade.
France separately agreed to delay the imposition of a digital tax
on big tech companies to allow time to work with the U.S., which
had threatened steep tariffs in retaliation for the levy.
"From a trade perspective, we feel very good about the
agreements that have come together," Tyson Foods Inc. Chief
Executive Noel White said in an interview. He cited the U.S.-China
trade deal and passage of a new trade deal with Canada and Mexico,
replacing Nafta. Mr. White, chief of the U.S.'s biggest meatpacker,
said "the global economy is healthy, not as healthy as a few years
ago, but still healthy."
The Trump administration wasn't shying away from other trade
fronts. Treasury Secretary Steven Mnuchin, in a Journal interview,
warned Italy and the U.K. they would face tariffs if they proceeded
with their own versions of the French tax. Mr. Trump, also in an
interview with the Journal, said he was serious about potential
tariffs on German cars amid trade talks with the European
Union.
Despite those threats, the China deal has offered some
executives reason for optimism. That optimism is tempered by
looming questions about how the deals will be implemented and
whether, in the case of the U.S. and China, the two sides would
continue to make progress in follow-on talks.
"Things have stabilized a bit," said Tom Palmer, chief executive
of Newmont Corp., the world's largest gold miner by production.
"There are question marks in execution," he said in an interview.
Telecom-equipment maker Ericsson AB CEO Börje Ekholm told The Wall
Street Journal that "we still need to see how it pans out."
Organizers of the forum, an annual gathering of world leaders,
business executives and celebrity activists, have tried to promote
this year's installment as a chance to discuss sustainability --
how to make businesses more responsible for the environmental and
social costs of their products -- amid heightened investor and
consumer scrutiny.
That theme dominated some of the early sessions of the meeting:
Several resources companies used the forum to acknowledge the new
pressure.
"Investors now won't put their money in carbon-intensive
companies," said Greg Barker, chairman of EN+ Group PLC, a
London-based aluminum and power producer, during a session Tuesday.
"We see a shift in the investment community," agreed Vicki Hollub,
chief executive of Occidental Petroleum Corp., on the same
stage.
But Mr. Trump's presence here -- after his speech he was
scheduled to host a lunch, a dinner and a breakfast before leaving
-- has kept the focus for many business leaders on trade.
The U.S.-China trade deal should have a "confidence effect,"
said JPMorgan Chase & Co. Co-President and Chief Operating
Officer Daniel Pinto. In 2019, the U.S. economy was powered by
consumers who borrowed and spent at a healthy pace. Fears of a
lengthy trade war, however, made corporate leaders skittish. The
trade deal should help, he said.
It's "a good background for the economy to grow in the months to
come," Mr. Pinto, who runs JPMorgan's corporate and investment
bank, said in an interview. He said that all could translate into a
busy year for deals. Mr. Pinto said, though, that the U.S.
presidential election could complicate matters. The election
"brings a lot of question marks" for the markets, he said.
--Natasha Khan and Parmy Olson contributed to this article.
Write to Chip Cummins at chip.cummins@wsj.com and Marie
Beaudette at marie.beaudette@wsj.com
(END) Dow Jones Newswires
January 21, 2020 11:35 ET (16:35 GMT)
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