Try to explain what has just happened in front of our eyes, but maybe more importantly, what it means for what comes next. So, I want to start, if I could, with Madam Lagarde. And this is where I want to go with this, if I could, because I think we're all trying to figure out what we just saw. I think there was a lot of whiplash throughout the week. And we heard a couple of different perspectives, one of which came from the Prime Minister of Canada, Mark Carney, who said, 'Every day we're reminded that we live in an era of great power rivalry, that the rules-based order is fading, that the strong can do what they can, and the weak must suffer what they must.' 'Let me be direct,' he said. 'We are in the midst of a rupture, not a transition.' And I think we all want to understand whether you agree with that and what it means.
Thank you so much, Andrew, and good morning to all of you. I'm not exactly on the same page as Mark. And having, you know, 25 years of business background, I think that we policymakers are at a point where we have to look at Plan B, or Plans B, but even with those Plans B, which have also been articulated by Ursula von der Leyen, I'm not sure that we should be talking about rupture. I think we should be talking about alternatives. We should be identifying much more so than we have, probably in the past, the weaknesses, the sore points, the dependencies, the autonomy. But, obviously, I take the view that from an economic and from a business point of view, we depend on each other. We have these very strong links and bind.
Suppliers sometimes are in a position of strength. Demanders, if I look at supply and demand, also have a position of strength. And I think that all directions have to be explored. And that my takeaway, personally, as a central bank president, is that we have accountability to the truth. You know, my economist often says, 'Try to distinguish the signal from the noise.' Well, I think we've had a lot of noise this week, and it's been a tremendously interesting and fascinating week from all perspectives. But our duty as central bankers, our duty as economists, is to distinguish the signals from the noise. And I would make one point, Andrew, if I may. We hear lots of numbers floating around. And I would just like to call your attention to the fact that numbers have to be defined, identified. When you hear, you know, huge growth numbers, for instance, most of those numbers are nominal growth numbers. The real numbers are the real growth numbers. So, when you hear 5% here, or 6%, or 7%, or 3%.
In most instances, those are nominal numbers. You then have to take into account inflation and deflate those nominal numbers by the inflation. Then you get to the real numbers. This is one of the few things, I know it sounds a bit esoteric to the non-economist, but it's important to actually speak the truth. And that's one of my takeaways from here. We have to distinguish the signals from the noise. We have to be honest about the numbers that we use, and we rely on inflation expectations. We rely on the forecasts that are produced by our teams. We have to be honest when we publish, identify, communicate, and leverage on those numbers. There are lots of other issues that I could come to, but this is my takeaway at this point.
I'm going to go to Kristalina, because one of the things I think we're all trying to understand is in a world of new allies or shifting allies, tariffs, and commentary like this, US Commerce Secretary Howard Lutnick said, as I think we all heard, 'Globalization has failed the West and the US.' Said it's a failed policy. Says what the WEF has stood for, which is export offshore, find the cheapest labor in the world, and the world is a better place for it. But, as a result of that thinking, it may be rewriting a lot of what those relationships look like, and also the economics behind the world order which we have known for so long.
Well, there is no question that the world is changing. It has been changing for quite some time. There are two new features that we need to embrace. One is we are in a more shock-prone world. We get surprised by geopolitics, by technology, by climate. And we are not so accustomed to be in that kind of fast-changing environment. And two, we need to recognize that we are in a multipolar world. There are now regions in the world that have picked up. They have economic and geopolitical significance that they didn't have before. I can tell you from where I sit at the IMF, we embrace lovingly all our 191 members. And for a long time, we would do analysis at the country level, and then at the global level. And now we recognize that we need to look at these regions. We need to look at the world as it is changing. And for example, the Gulf Cooperation Council is a place I visit frequently because of the economic and geopolitical role it has. ASEAN is a part of the world that has shown tremendous dynamism. So, the point I want to make is that how many of you have watched the movie The Wizard of Oz? Raise your hand. Wizard of Oz? Very simple. We are not in Kansas anymore.
Dr. Georgieva, weigh in on this for us, because the other piece of this is despite all of the various things we learned this week in what seemed like a lot of back and forth, and all of the consternation and hand-wringing, the economic numbers and the outlook, for the most part, seems to be remarkably optimistic.
Yes, thank you, Andrew. I know it's hard for people to believe, especially with the tremendous disruptions we are seeing. So, sometimes when you quote the numbers, and like Christine said, we have to be careful about the numbers we're quoting. But I like to speak based on the numbers I see. People get surprised, but why should you be? Some of the systems that were built over these past 80 years were remarkably well built. And so, what is happening is that in spite of all the disruptions, there's some resiliency built into the system. And that's what's showing up, along with other new things that are happening. So, for instance, on the trade front, trade has suffered the biggest disruption in 80 years, global trade. There's absolutely no doubt about that. Global trade rules have been undermined. But I think the system has been put together in such a way that is quite strong, and it will take a lot to destroy it, because we find that when we do the analysis, we haven't changed our methodology, 72% of world trade is still going on on WTO terms. Some people find that difficult. So, the system is resilient. But does that mean that it doesn't have problems? Absolutely not. So, I always say, I may not agree with the unilateral actions on trade that have been taken, but I certainly agree with some of the diagnosis that things are not going well, and things need to change. And that's why the WTO, we're very keen on reforming. But let me say this from this week. There's one message. When I came in, I was in another interview, and last year I said, 'Chill,' when I was asked, 'What should we do with the world?'
Chill? Are you still chill? Last Davos.
And you asked me, I said, 'Calm, steady nerves at this time.' Steady nerves, meaning that you don't have to react immediately to all you see. And that's where I share Christine's, let's separate the noise from actually what is happening. You need steady nerves to assess what the situation is and to react. If you react immediately, you may react the wrong way. But let me also then add that what we should learn is that anyone who has too many dependencies, if business people and policymakers leave this place not knowing that they have to manage their dependencies, then they've not taken away a lesson. If we are over-dependent on the US for markets, from the trade front, over-dependent on China for critical supplies, we need to diversify. And I think part of what Mark was saying was that he is trying to diversify Canada in trade, and we are supporting that. Our members should diversify their trade.
But just to follow up on that, do you think this is a forever situation? Meaning, there's some view that President Trump has taken a very aggressive approach around tariffs and around allies, and that he will be in office for another 3 years, but that the world could change in the future as a result. And then there's other people who think this is a state of permanence. Some of these divides, some of these tariff issues, some of these issues around supply chains and resilience and other things. Some on the good side, some on the bad side. So how do you see that?
I don't think we'll go back to where we were.
No. And I think that if I were a business person and a policymaker, I would be planning against a world that is not going to go back to where it was. A world that will have built-in uncertainties in it, and therefore I need to plan for how I'm going to be resilient with my business or my country. And I so touch on something Kristalina says, if I was running a country, I'd be trying to strengthen myself and my region, and I'd be looking at my region and then building resilience. So I don't think things will go back, but they will not be as bad as maybe we'll have a slightly better steady state for the future, but I don't believe we're going back.
Can I bring a little bit of a historical outlook on that? I agree with Ngozi, but I would add this. We have always traded and we will always trade. Trade is like river water. You put obstacles in it or surround it. Yes, it would be different, but there would always be the necessity of Dr. Ngozi to look over world trade. I don't know if you're clapping for me or for WTO, but whichever it is, welcome it.
I agree. There'll be a core. The multilateral core will be needed. Let me go to Minister Al-Jadaan. I think one of the other pieces that wasn't actually as big a discussion this week in some ways, though the topic of energy came up repeatedly, but oftentimes in the context of AI. But let me ask you in the context of geopolitics, what you think of the impact of what's happened with the US and Venezuela, and ultimately what you think it means to the price of oil, and how you see all of that playing itself out.
Thank you very much, and I would like actually to just comment on the earlier discussion very briefly, and then I'll come to the energy market. It was interesting to hear a lot of discussions, including in the last 10 minutes, about we are living in a new world order. And I think it's interesting because we need to define 'we'. And I think I can tell you a lot of 'we', our region included, have actually been living in a different world order for decades. So the West is just starting to experience it, and that's why they say 'we'. But we've been living it actually for some time. And the reason why I mentioned it is, look at those who lived it for decades and how they had to deal with it. And a few examples, I would talk about the Gulf states, but more those who actually even reached the diversification they wanted, you know, Singapore, Korea, China, and then look at what we are doing in the GCC. So you need to build resilience, and you need really to focus on what you can control. I mean, I agree, isolating the noise, muting the noise is very important because you just focus on what you can do, whether it is, like Ngozi said, in your own country or in your own region, and build that resilience. Back to the energy, I think Venezuela has been, I think, a founding member of OPEC and has been producing oil, even though at a lower level recently or in the last few years. I'm not an expert in oil, but I can tell you generally I don't think that you will see any serious impact in the oil market. Any increase will take time and will take significant investments. And the worry that we should really focus on is not just Venezuela. The worry is you need to make sure that your calculation of the energy demand and energy supply, and the price levels at which investments will flow into the oil market, will incentivize investors and not damage the world economy. So that fluctuation that we see, and I can tell you, every time there is a suppressed oil price, it is followed by a serious spike that hurts the global economy. And our role as OPEC Plus members is to try and actually stabilize the market so that we avoid as much as possible, or at least mitigate, reduce this fluctuation.
Albert Bourla, I want to understand the perspective of a multinational CEO in this moment, and what you saw happening this week, the conversations that you had with people throughout the week. I'm curious how your job in so many ways has fundamentally shifted.
First, I want to make a comment on if the world will be the same in 3 years or 5 years. And clearly the world will not be the same as it was, but also it's not going to be the same as it is. I think after 3 years we'll come to something that is different. In several aspects it would be better. I hope that Europe, for example, will be a more dynamic Europe, a more self-sufficient Europe, which is good. I think China will emerge much faster. But I think that some will be worse than before, and that's always the case with the way that the global economy...
You said the good part, and then you said what's the bad part?
I think the mistrust that has been developed among nations. I think the fact that the water has to go around multiple obstacles rather than was flowing in a very open space will be the challenges that we have to face.
Let me ask you a different question. One of the things that happened earlier this week is President Trump, when he spoke to us, talked about drug prices. In fact, he spoke about these conversations he was having with President Macron about trying to press France to pay more for drugs, and to press other countries in Europe to pay more as a way for US citizens to pay less. How do you see that playing out? What are the conversations that you're having behind the scenes on that very issue?
Yeah. Health is always in the epicenter of the political debate. So it affects a lot of politics and geopolitics. Right? So it is not a surprise to me, and drug pricing is the name of the discussion today. Tomorrow it looks like in the US the name of the discussion is insurance. Right? So it is always there. Coming to your first question, how that changes my role as CEO. Clearly a lot. I spend way more time in Washington. I spend way more time in Paris, in Germany, trying to discuss, and it is not always easy, but it is way better if you engage into this discussion because the results are much, much better. On the issue of drug prices themselves, though, if we were all sitting on this stage 5 years from now, do you believe that European countries are going to pay double, triple what they pay today, and that US customers are going to be paying 50% or more less than they're paying today? In Europe I have seen a tremendous shift towards understanding that they need to build innovation in Europe and they need to pay more for it. I've never seen it before. That will affect the drug prices. I will give you an example. The UK signed a deal with the US government that they will raise the commitment to spend from 0.28% of GDP in innovative medicines to 0.6% of GDP in innovative medicines, which is very close to the US level, within 10 years. So in a transition period and with some commitments and milestones for the next 2 years. I think that's very positive. I had discussions myself with President Macron. I had discussions with other European politicians, and they are extremely interested in not missing the train in the biomedical innovation that is booming, that used to be dominated by the US with 35% of global clinical trials being in the US, but China is closing the gap already, 30% of global studies are happening from Chinese companies, up from 5%. And when they see the European numbers, 12% of global studies are happening in Europe compared to 22% 10 years back. So this is an area that clearly will boom, health. And why? Because demographics are demanding it. People are living more. People are aging. The need for medical innovation is huge. So the demand will be very big, but also the offer will be such that we have never seen before because advancements in biology, but more importantly AI and advancements in technology will allow us to bring medicines that we didn't even dream of before. So the question is who will deliver this innovation? And clearly right now, US and China, with China probably surpassing US in 1 or 2 years, are the two players. And Europe, all the European leaders, they see that and they want to be part of it. And they understand that they need to pay for innovation so that they can develop a biotech ecosystem in their region.
I'm Lagarde. Yeah, I'd love to echo what Albert said because I think we have heard quite a lot of European bashing in the last few days. But if anything, it has been good, and we should say thank you to the bashers because I think it has given us a complete realization of the fact that we have to be more focused. We have to work on those Plans B that I was talking about, and we have to focus on innovation, improvement of productivity, and the rest of it. Point number one. Point number two, we are dependent on each other. If you look at AI, which has been much talked about in the last few days, AI is capital intensive, energy intensive, data intensive. And it prospers if there is plenty of all that. If we do not work cooperatively, if we do not define the new rules of the game, there will be less data available to process, there will be less capital flowing back and forth and here and there. And that is not conducive to the prosperity of a sector which is currently leading the game and which is very promising in terms of productivity. So we are in a bind, let's face it. And distinguishing the signal from the noise, I think, is critically important in that respect. The business community understands that. Third and last point. You asked whether there was a complete dissociation. No. I personally, and this might be my emotional side, sorry about that. We women tend to be emotional. I think we have to think of the people. And I have huge trust and affection for the American people. And I know that at the end of the day, the deeply rooted values will prevail. That is my hope and that is my very, very strong belief. Added to which, and that is something that applies to all of us, we have to be careful about the distribution of wealth and we have to be careful about the disparity that is getting deeper and bigger. If we don't pay attention to that, we are heading for real trouble.
So, Andrew, disparity both within countries and across countries. When we talk about prosperity, we also have to be mindful that there are countries in the world where conditions are bad and worsening. We just presented our global economic outlook. We upgraded the United States, the Eurozone, China, India. But we have also seen countries that are either affected by conflicts or have really terrible macro conditions getting worse off. And the point I want to bring to all of our attention here is now we have artificial intelligence that is going to put on steroids the transformation. And it would also pose this risk of the accordion of opportunities opening in favor of some, but not of others. And if I miss one thing during this week that we have here, is that, well, now I miss two things. One thing I miss is now all of a sudden 3.3% looks like a very good growth. What happened? We used to say that growth is not enough. And now I hear in many conversations, you know what? The IMF upgraded growth projections from 3.1 to 3.3. What a beautiful story. Beautiful, but not enough. So one thing I want to appeal to all of us, do not fall into complacency. Growth is not strong enough. And because it is not strong enough, the debt that is hanging on our necks, that is reaching 100% of GDP, is going to be a very heavy burden. So, yes, more attention to growth. Yes, more attention to those that are falling off the wagon, and we are kind of losing sight of them.
Yeah, no, I just wanted to come in on this issue of the boom in innovation in medicine and pharmaceuticals and biologics, and how everyone is positioning, from China to the US to the EU, where it's happening. And just say as we do it, it's because of Christine's inequality comment. We shouldn't forget the rest of the world, because we have also a demographic problem in those parts of the world where the innovation and the boom is happening. And whilst we focus on maybe the drugs that are needed in those areas, if we neglect the rest of the world, we don't know what's going to happen there. That could also stand up and bite us. That's the first point I want to make.
It's not only important what you say because that will bring unity to the world, but it is also very important because it is the right thing to do. But secondly, remember also that these are the future markets. So Africa will be 2.5 billion people, 800 million of them will be middle class by 2050. And one in four Africans will be, you know, 25% of the world's labor force. So they are also the markets of the future. So for those two reasons, emerging markets and poorer countries or poorer parts of the world now, they're markets of the future. So as you develop, just Albert, just to remind you, you also need to bear in mind that they're your markets.
You have reminded me many times in our life. So I will never forget.
Let me ask you, the panel, a question about innovation, and in particular we talk about the growth and where growth is going to come from. And I think we will all agree that it seems like a lot of the growth is concentrated coming from artificial intelligence. And do we think that that is okay? Is it too concentrated? But potentially, maybe even more importantly, you know, Elon Musk was here yesterday, talks about this, you know, great age of abundance, that in great success with AI, we are going to live in this new era. And I think, you know, Christine Lagarde talked about inequality, and I think one of the questions is where do the profits of the AI boom ultimately accrue? And what does society ultimately look like on the other side? Who wants to take that?
Can I start? I think it's, to start with, I think first in the immediate, you know, two or three years, I think we need to be careful not to overestimate what's the impact of AI. AI is absolutely important. But for the next, for '26, '27, '28, I think we need to make sure that we don't overestimate what the impact of AI. Second is we need to avoid underestimating the risks that AI is going to bring. And I think Kristalina, also Christine, covered that in terms of the divergence of where the wealth is going to go. And third, we need to absolutely be careful with all the noise that we're hearing, including from AI, that we have a very serious, very serious debt issue both in the public and private that could actually, with all the noise that we are hearing in this week and beyond, can actually surprise us just like the inflation in '22. So we need to be very careful while we need to ensure that the AI is diffused and the benefits go to as many people, as many small and medium enterprises as possible. We need to be watchful. I'll stop there.
Yeah, I'm happy to pick it up. So I made my point about distribution of wealth and revenue. But I take away from this week two things on AI, and I've learned it from the AI proponents themselves, some of them geniuses in many areas. Two things that some of them say. Number one, is it going to be open source or not? And that's a really important discussion that they will be having, that maybe policymakers will engage in as well. Think about internet. Is it a common good? Has it been a common good? How is it governed? I think on AI there is an element of that discussion that needs to be had. The second one is how is it, I know I'm a European, so how is it regulated? I heard it from them, not me. They themselves are saying, 'Let us watch out.' From a general public good point of view, how much do we need? Do we want to facilitate this terrible path that we have observed with the use of social media? With young kids prey to horrible behaviors, for instance. So I think on those two accounts, the AI experts and actors are saying, 'We must have that discussion and we must understand how we use AI so that we don't jeopardize social fabrics, the youth, the kids who are coming.'
Can I just follow up on one thing real quick? I apologize just because the minister made a comment about debt. And I know we're going off topic for a moment because we were on AI. But I'm curious, given what you do for a living, Madame Lagarde, what you think about, and there's obviously corporate debt, but I think you're referring to sovereign debt. And how much in this moment, I've always argued that debt is the match that lights the fire of any potential crisis in the future. And when you look at the debt that's in the system today, where do you see the risk?
First observation, AI developments are not predominantly financed by debt at the moment. So I don't see that financing as the actual source for the next moment. There's debt and debt. There's the debt that is used to reform, restructure, invest in sustainable growth, and that is conducive to productivity. That debt is healthy. And then there is the other debt. And is there too much of it? Probably.
Can you separate the two, though?
Well, it needs policymakers to be, you know, very attentive to what they do. The IMF is scrutinizing the kind of debt that is being incurred by sovereigns. I don't think that at the moment the corporate sector in the advanced economies is so heavily burdened with debt. I think we're more talking about the sovereign debt. And as I said, what is key is to indicate the strategy and the direction that governments adopt in order to keep control of public finance. That's, I think, even more important than the volume itself, which is a concern.
I mean, it is a very simple story. Debt has gone up, reaching 100% of GDP, sovereign debt, and growth is not strong enough. So we have a problem. I want to go back to AI. We are researching what is actually happening in labor markets. And there are three important observations. Number one, 50% of jobs to be affected by AI, either enhanced or eliminated or transformed, 40% globally. This is like a tsunami hitting the labor market. Number two, we looked at the micro level. What is happening with jobs? And we see that in advanced economies, one in 10 jobs is already enhanced, and the people in these jobs are paid better. When they're paid better, they spend more money in the local economy, they spend more money in restaurants, here, there. Demand for low-skilled jobs goes up, and actually total employment seems to slightly increase because of it. But there are two very serious problems. The first one is that tasks that are eliminated are usually what entry-level jobs present. So young people searching for jobs find it harder to get to a good placement. And two, and the two I'm very worried about, who is getting squeezed? The jobs that are not touched. They're kind of the same. They're paying now less. So middle class inevitably is going to be affected. And the third observation I would make, that is my biggest worry, and actually we heard people talking about it, where Christine talked about it, where are the guardrails? This is moving so fast, and yet we don't know how to make it safe. We don't know how to make it inclusive. And if there again, I'm talking about my regrets of things we haven't discussed much here, we missed an opportunity to talk about that more. So my appeal is, wake up. AI is for real, and it is transforming our world faster than we are getting a handle on it.
Can I just ask one follow-up to that, which is I think there's a lot of people talking about this issue and maybe we should be talking more about it, but the question is, what do you do about it? We can identify the problem. I think we've all spotted this. We see this train coming down the track. And I think we all don't know, you know, when the train will arrive. But it's going to arrive. And so what are we supposed to, we can talk all about it, but what are we supposed to do in advance of it?
Christine gave you the solution for the Europeans in charge. Go and fix it. Now, isn't this where we now need to think about global cooperation? I know everybody thinks multilateralism is dead and we're all on our own. But there are certain problems we just cannot solve in this world alone. And no one country or even one region can be responsible for regulating or putting the guardrails on AI. So should we not be looking to global cooperation on this issue, even though that's becoming a little bit of a dirty word? But before I hand over to you, I do want to say one thing. It's almost, I'm almost afraid to say it. From the trade perspective, the work we've done shows that AI could be very beneficial.
Yes. Why are you afraid to say it?
Because of the issues that we're talking about, about the governance. You know, it's not all a positive even in our work. But we find that for trade, the story is a very good one. In two ways, AI will help reduce trade costs tremendously, the logistics of trade, and it helps increase productivity. We also find that AI is changing the nature of goods traded. Merchandise is becoming, it has a lot of services incorporated in it. So it's quite exciting when you look at the landscape of AI from the trade front. However, so we have some work we did, you know, AI would increase trade by 40% by 2040. But only if adoption of AI is relatively equal. If it is not, we're going to create more inequalities, and that's where Christine's point is also valid.
Albert Bourla, I want to go to you on this actual topic for two reasons. One is AI is going to transform healthcare in a major way. I think there's so many advancements already happening, and I think there's a lot of excitement. I was talking to a scientist yesterday who was also though saying, and this is a very senior scientist, does remarkable work, who's historically hired lots and lots of junior people. And he was saying, 'I may not have to do that in the future.' And it's actually going to be a very interesting question for his lab in terms of how he allocates resources. And I'm curious as somebody who hires people in this business, what you think that does to the landscape?
I think productivity will improve across all sectors. I don't think that there is any sector that will see so, but it's transformational. My own is health because we will see not only the general and administrative part of the business, but more importantly in drug discovery. And AI is an extremely powerful tool. In the hands of good people will create greatness. In the hands of bad people could create evil deeds. I am a true believer that the benefits clearly will outpace the challenges and the risks. We do need regulations to do that. Are you asking me if in our labs maybe we could do the job with less scientists? Probably. But also I can see that the main direction that we are taking, it is not how to reduce our investments in the areas or how can do the same with less, but how can we do much more with the same, which is a very different way of seeing.
Right. We have all of the, we have central bankers here. We have ministers here thinking about it. Economics around the world. How do you think what you do for a living and actually what's happening in the pharmaceutical space and the connection with AI is going to change our economies?
Tremendously. I think health, first of all, it is the largest sector of GDP contributor. It is 10% globally, 18% in the US. Compare it with real estate, which is 12% in the US. Compare it with defense, which is I think 4% in the US. So it's tremendous. So by itself, health and the economic activity around it will create significant impact on global growth. But more importantly, health helps all other sectors to be more productive. That's the big benefit of health. And that's why I spoke about the demographic challenges that particularly in an aging population, the need to have a productive workforce that probably will start working more and more, I mean, older and older. I think it is extremely important.
We're going to run out of time, but I have one really final, maybe large philosophical...
I have a question for this group, and it relates to something that we have seen play out this week. It's a word that's come up a whole bunch of times on this panel, and it's the word about trust.
I think one of the very interesting things that's happened this week is there has been a real debate between the idea of what's long been really the underlying conversation at Davos, which is about creating trust, about creating relationships, about creating loyalty.
And on the other side, a view that I think has been espoused here this week, and I think you've seen playing out, that actually maybe all of this has been a veneer.
That the world really may very well be about power. That it may be about leverage. That when people in this room go to have different meetings with other people, or go to parties or this or that, they go in part because they're trying to gain some kind of leverage, some kind of leverage over somebody else. And that we are living in some kind of world that that's what it is, but that for a long time we haven't talked about it that way. I think that's actually to some degree how some parts of the administration in the United States even think about these power dynamics.
And I'm curious, sort of, if you could just from a philosophical perspective speak to this very issue, because I think underneath all of it, that's what this is about. This is about what relationships and loyalty mean, and whether that's real or whether there's something else that's always been at play and we're now just seeing it in a different way. Who wants to take that?
Good start if you want. I'll tell you of two things. One is, it is and has been, since I don't know, God created this earth, a power grab. So, you cannot hide from this. It has always been like this. Civilizations obviously moved, developed, were more rational, and empathy and group work became more valuable even to the powerful.
In today's world, I can tell you, just simplifying it, the fact that 3,000 leaders flew into this very difficult weather village, or took the train to come here, says something. That actually even the most powerful needed to come here and seek dialogue because there are areas where they just cannot resolve it on their own, no matter how powerful they are.
And I think the whole idea today is we need to make sure that we bring more about that dialogue, that cooperation, embracing forums like this, embracing the World Bank, embracing the IMF, which despite all the noise again, IMF and the World Bank have been embraced today stronger than what it was before. Because uncertainty requires these kinds of institutions to provide support. I'll stop there.
I want to second what Minister Al-Jadaan just said. I think trust and truth go well together. And what I take away from this week is that we have a duty of truth. We as institutions that provide numbers, that provide analysis of what is happening, hence my signals versus the noise. And this is how we can maintain trust. Second observation: it takes time to build trust. It doesn't take much time to erode it. I think trust has been eroded a little bit, maybe a lot, but our duty in the spirit of dialogue is definitely to rebuild what could have been eroded. Thank you.
On that note, let me thank this extraordinary panel for a remarkable conversation. Thank you very, very much. Now, please stay where you are for just a moment because I'd like to introduce Faisal Alibrahim, he's the Minister of Economy and Planning of Saudi Arabia, to the stage to deliver some brief remarks about something special that is coming up very, very soon.
Ladies and gentlemen, salaam alaikum warahmatullah wabarakatuh. I'd like to first start by thanking Larry, Andre, and Børge and the Forum team for putting together a remarkable week, to say the least.
As we reflect on the global outlook, uncertainty has weighed heavily on expectations. Expectations about growth, inflation, debt, trade, investment, and of course geopolitical risk. Yet the reality has been more resilient than expected. Despite uncertainty, the global economy has endured, adjusted, and continued to move forward.
But what is clear, and perhaps clearer this year than ever before, is what has surfaced as we have tried, often repeatedly, to tackle these challenges. Pragmatism has become scarce. Trust has become increasingly transactional. Collaboration is narrowing and in fact sometimes losing momentum. And too often voices speak, but fewer are truly heard.
And if we think about it, if you think about stability, stability can't be quickly built, and it can't be bought. Stability needs to be founded, nurtured, protected, reinforced, and guided. Stability is non-negotiable. When trust and collaboration are genuine, they compound over time, reinforcing one another so that progress holds when circumstances change.
This is where the focus must shift, like our colleague said, not towards the status quo, but towards the ingredients that make collaboration actually count. Being pragmatic and thinking long-term, with the discipline to follow through beyond intent and ambition, and the persistence to remain engaged even when views diverge, especially when views diverge.
No single convening, no matter how well-intentioned, will resolve every global challenge. But each time there's an opportunity, an opportunity for all of us to be resolute and deeply invested, and for us to build a culture that allows cooperation to function in the first place. A culture that nurtures strength and progress and unlocks the potential of the global economy in all its diversity.
Every country, every region, and every economy to stand shoulder to shoulder and confront complexity, work through it, rather than force or accept artificial convergence or watered-down consensus.
When confronted with uncertainty, our late founding king, King Abdulaziz, once said, which captured a simple yet powerful idea. Facing challenges requires strength and confidence to move forward, especially when conditions are difficult. For there is no virtue in weakness. We cannot sit idle and wait for decisive moments. We cannot keep talking about multiple futures. What future do we want to see? And what are we going to do to get there? Seriously and repetitively.
As much as we want to believe this boxing match will end with a knockout blow, reality keeps reminding us and teaching us that this is the full 12 rounds. And it is in this spirit that I'm honored to extend an invitation to you to join us in Jeddah, Saudi Arabia, for the World Economic Forum Global Collaboration and Growth Meeting this April, under the patronage of His Royal Highness, Crown Prince and Prime Minister Muhammad bin Salman.
This forms part of an ongoing effort that builds on the momentum of the World Economic Forum special meeting held in Riyadh, and more importantly, on the platform Saudi Arabia has become. A global capital of pragmatism and of consequence.
At a time when the global economy is confronting long-standing structural challenges, this effort helps move cooperation from intent to outcome. By setting clear expectations, anchoring responsibilities, and ultimately making dialogue count. See you all in Jeddah. Thank you very much.
Thank you. It has been a remarkable week. Minister Mohammed Al-Jadaan is here. WTO Director-General Dr. Ngozi is here, and we have Pfizer's chairman and CEO Albert Bourla. And now, the president and CEO of the World Economic Forum to the stage for some final remarks for this remarkable week. Please.
Thank you, Andre Sorkin. Thank you to this great panel. I'm so proud that the three women on the panel are also on our Board of Directors: Christine, Dr. Ngozi, and Kristalina. So, we really have great supervision and inspiration.
Dear friends, it's surreal that it's Friday and we're seeing the end of the meeting. I thank you all for participating in this annual meeting very actively. And a special thank you to our two co-chairs, Andre Hoffmann and Larry Fink, for exceptional cooperation.
And I tell you, they have really worked tirelessly and very committed to make this annual meeting happen, and also to the real mission of the World Economic Forum. And of course, as Andre already mentioned, I send like a monumental thank you to all my colleagues at the World Economic Forum that we pulled off this meeting. I'm so proud. Thank you.
The Forum is, in my view at least, the world's leading platform for multi-stakeholder dialogue on the most complex and often contested issues of the day. We convene, as we have seen during these days, very diverse voices from across governments, business, and civil society.
Which means that we do see not always agreement. Sometimes we really see strong disagreements. That's okay, because the purpose of the week and the Forum's work over the year is to create a trusted space for dialogue. Dialogue is a prerequisite for moving the world forward. If you don't even have a dialogue, you will not see any results.
We are not supposed to be like an echo chamber of consensus. Unlocking the potential for responsible AI, as the panel touched on, strengthening markets, facilitating engagements to address conflicts, discussing how to reach real inclusive growth and also real trickling down, happen if decision-makers who do not always see eye to eye talk to each other. This type of dialogue, real dialogue, is never easy. It requires patience, commitment, and creativity.
But it is really necessary because the absence of discourse deepens division.
I think pictures of history have shown us that it is really filled with walls rising and tension mounting at times, but also of leaders working to find areas of agreement in challenging moments. I think that is what we have seen also during this week. I'm really so heartened to see that this year's annual meeting convened 3,000 participants from 130 countries, 830 CEOs and chairs, 64 heads of state and government, and the numbers were growing every day during the meeting. It's a record.
It is a real testament to the fact that in one of the most complex global moments in generations, leaders were committed and inspired by our team a spirit of dialogue. It is my hope that we can carry this forward in the year ahead and beyond, and the first test will be in the spring Davos in the kingdom in Jeddah, 22nd of April.
So, I have to admit, relieved, but also inspired and very thankful. And I would like the two co-chairs, if you don't mind, to join me here on stage so we can give them also a big hug and applause and thank them. Thank you.
So, there's a special moment, as you can see, closing the first meeting where I was acting as a co-chair. Spirit of dialogue indeed, but I'm going to do a little sort of change. I'm going to separate you into two.
On one side there's our members, and thank you for coming. I think you heard me saying that a couple of times during the week. Without you, we are nothing. So, we really count on you to come, and I mean, I talk for those who are still here, of course, because quite a number of you have left. But thank you very much for doing this. And then, the staff. I mean, to pull off something like we just experienced, where the spirit of dialogue and the five strategic priorities were taken out into such a sophisticated outcome, needs an enormous amount of energy. And this is a human quality that I really found in everybody in the staff. So, please join me in clapping for them. They have done a fantastic job.
Taking people from all over the world and bringing them together in the wonderful town of Davos with the support of the Canton and Graubünden is a remarkable achievement. Thank you.
I would just say thank you to all of you, but more importantly, the big thanks is to the thousand members of the World Economic Forum who make this all happen. To pull this all together, making sure all the sessions work, making sure that we are consistent across all the different presentations and content. Even we had better music this year, we had better food this year. We did not have better traffic. That's something we're going to have to work on.
But really, a great, great thanks and gratitude to all the members of the World Economic Forum for pulling this off. None of us could have done this ourselves. Hopefully you all saw the great collaboration between Andre and Børge and myself. It really worked.
And lastly, I just want to, because I thought it was so profound, I want to end this forum with a quote that Elon Musk said in closing yesterday's session, that it's better to be an optimist and wrong than be a pessimist who's right. So, on that note, enjoy CA.
So, we have a full cast to try to explain what has just happened in front of our eyes, but maybe more importantly, what it means for what comes next. So, I want to start, if I could, with Madam Lagarde. And this is where I want to go with this, if I could, because I think we're all trying to figure out what we just saw. I think there was a lot of whiplash throughout the week. And we heard a couple of different perspectives, one of which came from the Prime Minister of Canada, Mark Carney, who said, 'Every day we're reminded that we live in an era of great power rivalry, that the rules-based order is fading, that the strong can do what they can, and the weak must suffer what they must.' 'Let me be direct,' he said. 'We are in the midst of a rupture, not a transition.' And I think we all want to understand whether you agree with that and what it means.
Thank you so much, Andre, and good morning to all of you. I'm not exactly on the same page as Mark, and having, you know, 25 years of business background, I think that we policymakers are at a point where we have to look at plan B, or plans B, but even with those plans B, which have also been articulated by Ursula von der Leyen, I'm not sure that we should be talking about rupture.
I think we should be talking about alternatives. We should be identifying much more so than we have probably in the past the weaknesses, the sore points, the dependencies, the autonomy. But obviously, I take the view that from an economic and from a business point of view, we depend on each other. We have these very strong links and binds.
Suppliers sometimes are in a position of strength. Demanders, if I look at supply and demand, also have a position of strength. And I think that all directions have to be explored, and that my takeaway personally as a central bank president is that we have accountability to the truth.
You know, my economist often says, 'Try to distinguish the signal from the noise.' Well, I think we've had a lot of noise this week, and it's been a tremendously interesting and fascinating week from all perspectives. But our duty as central bankers, our duty as economists, is to distinguish the signals from the noise. And I would make one point, Andrew, if I may.
We hear lots of numbers floating around, and I would just like to call your attention to the fact that numbers have to be defined, identified. When you hear, you know, huge growth numbers for instance, most of those numbers are nominal growth numbers. The real numbers are the real growth numbers. So, when you hear 5% here or 6% or 7% or 3%, in most instances, those are nominal numbers.
You then have to take into account inflation and deflate those nominal numbers by the inflation. Then you get to the real numbers. This is one of the few things, I know it sounds a bit esoteric to the non-economist, but it's important to actually speak the truth. And that's one of my takeaways from here. We have to distinguish the signals from the noise. We have to be honest about the numbers that we use, and we rely on inflation expectations. We rely on the forecasts that are produced by our teams. We have to be honest when we publish, identify, communicate, and leverage on those numbers. There are lots of other issues that I could come to, but this is my takeaway at this point in time.
I'm going to go to Kristalina because one of the things I think we're all trying to understand is in a world of new allies or shifting allies, tariffs, and commentary like this. US Commerce Secretary Howard Lutnick said, as I think we all heard, 'Globalization has failed the West and the US.' Said it's a failed policy. Says what the WEF has stood for, which is export, offshore, find the cheapest labor in the world, and the world is a better place for it. But as a result of that thinking, it may be rewriting a lot of what those relationships look like and also the economics behind the world order which we have known for so long.
Well, there is no question that the world is changing. It has been changing for quite some time. There are two new features that we need to embrace. One is we are in a more shock-prone world. We get surprised by geopolitics, by technology, by climate. And we are not so accustomed to be in that kind of fast-changing environment. And two, we need to recognize that we are in a multipolar world.
There are now regions in the world that have picked up. They have economic and geopolitical significance that they didn't have before. I can tell you from where I sit at the IMF, we embrace lovingly all our 191 members. And for a long time, we would do analysis at the country level and then at the global level. And now we recognize that we need to look at these regions. We need to look at the world as it is changing.
For example, the Gulf Cooperation Council is a place I visit frequently because of the economic and geopolitical role it has. ASEAN is a part of the world that has shown tremendous dynamism. So, the point I want to make is that, how many of you have watched the movie The Wizard of Oz? Raise your hand. Wizard of Oz? Very simple. We are not in Kansas anymore.
Dr. Ngozi, weigh in on this for us because the other piece of this is despite all of the various things we learned this week in what seemed like a lot of back and forth and all of the consternation and hand-wringing, the economic numbers and the outlook for the most part seems to be remarkably optimistic.
Yes, thank you, Andrew. I know it's hard for people to believe, especially with the tremendous disruptions we are seeing. So, sometimes when you quote the numbers, like Christine said, we have to be careful which numbers we're quoting. But I like to speak based on the numbers I see. People get surprised, but why should you be? Some of the systems that were built over these past 80 years were remarkably well built.
And so, what is happening is that in spite of all the disruptions, there's some resiliency built into the system. And that's what's showing up along with other new things that are happening. So, for instance, on the trade front, trade has suffered the biggest disruption in 80 years. Global trade. There's absolutely no doubt about that. Global trade rules have been undermined.
But I think the system has been put together in such a way that it is quite strong and it will take a lot to destroy because we find that when we do the analysis, we haven't changed our methodology. 72% of world trade is still going on on WTO terms. Some people find that difficult. So, the system is resilient. But does that mean that it doesn't have problems? Absolutely not.
So, I always say I may not agree with the unilateral actions on trade that have been taken, but I certainly agree with some of the diagnosis that things are not going well and things need to change. And that's why at the WTO we are very keen on reforming. But let me say this, from this week, there's one message. When I came in, I was in another interview, and last year I said chill when I was asked what should we do with the...
Chill. Last year. Last Davos. Are you still chill?
I said calm, steady nerves at this time. Steady nerves, meaning that you don't have to react immediately to all you see. And that's why I share Christine's, let's separate the noise from actually what is happening. You need steady nerves to assess what the situation is and to react. If you react immediately, you may react the wrong way.
But let me also then add that what we should learn is that anyone who has too many dependencies, if business people and policymakers leave this place not knowing that they have to manage their dependencies, then they've not taken away the lesson. If we are over-dependent on the US for markets from the trade front, over-dependent on China for critical supplies, we need to diversify. And I think part of what Mark was saying was that he is trying to diversify Canada in trade, and we are supporting that. Our members should diversify their trade.
But just to follow up on that, do you think this is a forever situation? Meaning there's some view that President Trump has taken a very aggressive approach around tariffs and around allies, and that he will be in office for another 3 years, but that the world could change in the future as a result. And then there's other people who think this is a state of permanence, some of these divides, some of these tariff issues, some of these issues around supply chains and resilience and other things, some on the good side, some on the bad side. So, how do you see that?
I don't think we'll go back to where we were.
No. And I think that if I were business and a policymaker, I would be planning against a world that is not going to go back to where it was. A world that will have built-in uncertainties in it. And therefore, I need to plan for how I'm going to be resilient with my business or my country. And I so touch on something Kristalina said, if I was running a country, I'd be trying to strengthen myself and my region. And I'd be looking at my region and then building resilience. So, I don't think things will go back, but they will not be as bad as... maybe we'll have a slightly better steady state for the future, but I don't believe we are going back.
Can I bring a little bit of a historical outlook on that? I agree with Ngozi, but I would add this. We have always traded and we will always trade. Trade is like a river, water. You put an obstacle, it goes around it. Yes, it will be different, but there will always be the necessity of Dr. Ngozi to look over world trade.
I don't know if you're clapping for me or for WTO, but whichever it is, you're welcome here. I agree, there'll be a call. The multilateral call will be needed.
Let me go to Minister Al-Jadaan. I think one of the other pieces, actually not as big a discussion this week in some ways, though the topic of energy came up repeatedly, but oftentimes in the context of AI. But let me ask you in the context of geopolitics, what you think of the impact of what's happened with the US and Venezuela, and ultimately what you think it means to the price of oil, and how you see all of that playing itself out.
Thank you very much, and I would like to just comment on the earlier discussion very briefly, and then I'll come to the energy market. It was interesting to hear a lot of discussions, including in the last 10 minutes, about we are living in a new world order. And I think it's interesting because we need to define 'we'.
And I think I can tell you a lot of 'we', our region included, have actually been living in a different world order for decades. So the West is just starting to experience it, and that's why they say 'we'. But we've been living it actually for some time.
And the reason why I mentioned it is, look at those who lived it for decades and how they had to deal with it. And a few examples, I will talk about the Gulf states, but more those who actually even reached the diversification they want is, you know, Singapore, Korea, China, and then look at what we are doing in the GCC.
So you need to build resilience, and you need really to focus on what you can control. I mean, I agree, isolating the noise, muting the noise is very important because you just focus on what you can do, and whether it is like Ngozi said in your own country or in your own region, and build that resilience.
Back to the energy, I think Venezuela has been, I think, a founding member of OPEC, and has been producing oil even though at very low levels recently or in the last few years. I'm not an expert in oil, but I can tell you generally I don't think that you will see any serious impact on the oil market.
Any increase will take time, and will take significant investments, and the worry that we should really focus on is not just Venezuela. The worry is you need to make sure that your calculation of the energy demand and the energy supply and the price levels at which investments will flow into the oil market will incentivize investors, and not damage the world economy.
So that fluctuation that we see, and I can tell you every time there is a suppressed oil price it is followed by a serious spike that hurts the global economy. And our role as OPEC Plus members is to try and actually stabilize the market so that we avoid as much as possible, or at least mitigate, reduce this fluctuation.
Albert, I want to understand the perspective of a multinational CEO in this moment, and what you saw happening this week, the conversations that you had with people throughout the week. I'm curious how your job in so many ways has fundamentally shifted.
First I want to make a comment on if the world will be the same in 3 years or 5 years. And clearly the world will not be the same as it was, but also it's not going to be the same as it is. I think after 3 years we'll come to something that is different in several aspects, would be better. I hope that Europe, for example, will be a more dynamic Europe, a more self-sufficient Europe, which is good. I think China will emerge much faster. But I think that some will be worse than before. And that's always the case.
What part, just so we know? You said the good part, and then you said what's the bad part?
I think the mistrust that has been developed among nations. I think the fact that the water has to go around multiple obstacles rather than was flowing in a very open space will be the challenges that we have to face.
Let me ask you a different question. One of the things that happened earlier this week is President Trump, when he spoke to us, talked about drug prices. In fact, he spoke about these conversations he was having with President Macron about trying to press France to pay more for drugs, and to press other countries in Europe to pay more as a way for US citizens to pay less. How do you see that playing out? What are the conversations you're having behind the scenes on that very issue?
Yeah. Health is always in the epicenter of the political debate. So it affects a lot politics and geopolitics, right? So it is not a surprise to me. And drug pricing is the name of the discussion today. Tomorrow looks like in the US the name of the discussion is insurance, right? So it is always there.
Coming to your first question, how that changes my role as CEO? Clearly a lot. I spend way more time in Washington, I spend way more time in Paris, in Germany, trying to discuss, and it is not always easy, but it is way better if you engage into these discussions because the results are much, much better.
On the issue of drug prices themselves though, if we were all sitting on this stage 5 years from now, do you believe that European countries are going to pay double, triple what they pay today, and that US customers are going to be paying 50% or more less than they're paying today?
