Forum at opportune time

Davos: This year's World Economic Forum comes at a time when the global rescue packages designed in November and December are not coping with the scale of the problems the world's economy is facing.

A strong Gulf presence at Davos is part of the Arab world's continuing desire to be part of the global effort to find solutions to the problem, but the relatively small economies in the Gulf mean that their main offerings are focused on either using the financial muscle of the sovereign wealth funds to back global institutions, or through maintaining the oil price at a steady level.

The discussions at Davos are expected to echo the alarm expressed by Dominique Strauss-Kahn, managing director of the IMF, when he spoke to the Financial Times this week, saying that at the November meeting of the G20 the participating governments promised to take action in one coordinated plan, but "very little has been done and time is running out".

This was supported by Robert Zoellick, president of the World Bank, who said that pumping money into the economies was not enough and the real "challenge is to find political leadership".

And the world's problems are getting bigger: China is expected to slow down more dramatically and more harmfully than thought only a few months ago, asset prices around the world have still further to fall, there are serious gaps in global governance, and the world is continuing to ignore the imperative challenge of climate change.

These major issues are listed in the World Economic Forum' report: Global Risks 2009. Sheana Tambourgi, head of the Global Risk Network at the WEF, said when describing the need for action to combat these issues, that "these global risks cannot be tackled in isolation".

The report predicts that the massive government spending to support the banks in country's like the US, the UK, France, Italy, Spain and Australia is threatening those states' fiscal positions. The report emphasises that it is dangerous to address immediate concerns without thinking ahead and the report gives the example of the US deficit which has already reached a very high 4.6 perent of GDP.

The report also sumarises how global equity values have fallen more than 50 per cent, and will probable have more to go as a vicious cycle of declining assets values, write-downs and pressure on banks' capital positions all combine to create a continuing downward spiral.

And it records the lack of coordination among policy makers, regulators, and supervisors, making clear that better global is essential to deal effectively with the present crisis, while avoiding short-term fixes and slipping into protectionist panic.

This meeting of the World Economic Forum in Davos will define the problems, which at least are more obvious than they were in November, and will look ahead to the Group of 20 top industrial nations meeting in London in April.