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Davos 2020 Day 3 & 4: IMF shares some good news, KSA to host next Middle East WEF Summit, and more

On the two final days of Davos, the conversation regarding climate change and economic uncertainty continued, with renewed hope towards the future, tempered with caution.

The US and France come to a momentary agreement over digital tax Saudi Arabia is revealed to be hosting the next Middle East WEF Summit The IMF shares some good news - and some bad

With Davos wrapping up today, here are some highlights from the last two days of the yearly event.

The US holds off on the tariff card in face of digital taxation by France

Digital companies continue to be a headache for regulators the world across. 

After France ruffled the US’s feathers last year in the wake of a proposed 3% tax on sales generated by digital companies like Google and Facebook, French Economy and Finance Minister Bruno Le Maire revealed at Davos that the United States have held off on retaliating with levies on French goods.

Originally, “Paris argued that digital firms were paying little to no tax; but the United States said the levy was particularly “burdensome” for American firms and Washington threatened to impose tariffs on French products,” CNBC explains.

Now, La Maire has said his country had accepted a postponement of the payments to the end of 2020. 

“In exchange of this postponement … the U.S. accepts to suspend the sanctions against France,” Le Maire said. 

However, this is just temporary as La Maire explained that “there’s still some work to be done.”

“Everybody must be aware that we can’t go any longer with a taxation system in which [sic] richest companies – those who are making the most important profit – are paying less taxes. So, I’m very happy that at Davos, this is one of the key issues.” 

“It would be far better to have an international framework for everybody,” Le Maire noted, adding that otherwise the world would end up with a cacophony of national systems that would compound the problem, as per Reuters

Thunberg fires back at US Treasury Secretary
On Day 2, US Treasury Secretary Steven Mnuchin made an unflattering comment about Greta Thunberg following her explosive speech the day before. 

According to CNBC, Mnuchin sharply criticized the financial credentials of Swedish climate activist Greta Thunberg on Thursday, saying the 17-year-old should study economics at college before lecturing the U.S. on fossil fuel investments.

Speaking at Davos, Mnuchin was asked whether the world’s largest economy needed to completely and immediately divest from fossil fuels.

“Is she the chief economist or who is she? I’m confused,” Mnuchin said, before adding this was “a joke. That was funny.”

“After she goes and studies economics in college she can come back and explain that to us,” Mnuchin said.

In response, Thunberg had this to say the next day on Twitter: 

“My gap year ends in August, but it doesn’t take a college degree in economics to realise that our remaining 1,5° carbon budget and ongoing fossil fuel subsidies and investments don’t add up,” she said. “So either you tell us how to achieve this mitigation or explain to future generations and those already affected by the climate emergency why we should abandon our climate commitments.”

Saudi Arabia to host next WEF Middle East summit

It was announced yesterday that Saudi Arabia will host the next World Economic Forum Middle East summit, Arab News reported. In previous years, the summit was held in Egypt, Jordan and the UAE on multiple occasions. 

The theme of the summit will be the place of the region in the fourth industrial revolution, according to a posting on the official WEF website. 

The IMF has goods news – and bad news 
Kristalina Georgieva, managing director at the International Monetary Fund, voiced some positive financial news, and some not so positive ones. 

“We are projecting growth this year at 3.3%, next year at 3.4% – this is clearly an improvement vis-a-vis the record low of last year at 2.9%,” she said. 

This was a breath of fresh air after her opening speech at the WEF which carried a lot of doom and gloom. 

“We are back in the 1920s … similar high inequality, rapid spread of technology and huge risks and rewards in finance,” she had said. “For the analogy to stop right there and go no further acting together in a co-ordinated manner is critical.”

“Above all we are all adjusting to live with the new normal of higher uncertainty”. Economic uncertainty, as we mentioned in our highlighs of Day 1, has been the number one topic of discussion at Davos, alongside climate change. 

In an interview with Bloomberg on Day 3, Georgieva said she sees debt buildup reaching a danger point. She also acknowledges that the world is in a better place today than it was a few months ago back in October. Monetary policy has been successful, she said, and the trade deal between the US and China has helped ease tensions. 

“Transformative investments for low-carbon climate resilient development can be a major stimulus for growth,” she said on Day 4. “They may very well be the silver bullet we need.”

The World’s youngest PM pushes for female leaders to be the “new normal”
Finland’s Sanna Marin, the world youngest PM, made another appearance at Davos on Day 3, commenting on her election and the women’s increasing role in politics. 

Speaking about the global reaction to her inauguration as Finland’s leader in December, she said: “Actually I didn’t focus on the media attention so much,” she said, pointing out that five parties in Finland’s coalition government are all led by women and four of these leaders are under the age of 35.

As per CNBC, Marin hopes that the election of female leaders will not get as much attention in the future but would be considered the “new normal.” 

“We all have to fight each and every day for equality, for a better life. It’s very important for everyone to step in, it’s not someone’s else job. That is the reason why I got into politics.”

And with that, it’s a wrap for this year’s WEF forum!