Lagarde warns in Davos of the dangers of an unequal distribution of wealth | Economy | EUROtoday

Before an viewers stuffed with wealthy, highly effective and influential folks gathered for the World Economic Forum in Davos, the president of the European Central Bank (ECB), Christine Lagarde, warned this Friday concerning the dangers of not adequately addressing inequality issues. “We must be careful with the distribution of wealth and we must pay attention to inequality, which is becoming deeper and greater. If we do not pay attention to it, we are heading towards serious problems,” Lagarde stated. His method was obtained with applause.

The chief of the ECB launched the alert in a panel wherein, amongst others, the managing director of the International Monetary Fund, Kristalina Georgieva, additionally participated, who additionally launched a message of consideration relating to the difficulty of equality, in her case linked to the influence of synthetic intelligence (AI) on the labor market.

“AI will drive the transformation on steroids. And there is a risk that opportunities will open up for some, but not for others. (…) We expect that, in the coming years, in advanced economies, 60% of jobs will be affected by AI, whether enhanced, eliminated or transformed; globally, 40%. This is like a tsunami that hits the labor market.”

Georgieva pointed out that AI is increasing the productivity of certain high-level jobs, raising their remuneration, promoting consumption and thus contributing to the creation of certain types of jobs. “But there are two very severe issues. The first is that the duties which are eradicated are typically people who characterize entry-level jobs. Therefore, it’s tougher for younger folks on the lookout for work to entry a very good alternative,” said the managing director. “And the second, which worries me quite a bit: the roles that aren’t affected stay roughly the identical. They pay much less now. So, inevitably, the center class goes to be affected,” said the Bulgarian economist.

Georgieva also warned against complacency about the resilience shown by the global economy through 2025 despite tariff turbulence, and optimism over the slight upward revision of global economic growth in the latest study published by the IMF a few days ago.

“I hear in many conversations that the IMF has raised the projection to 3.3%, what a nice story,” he commented. “Nice however not sufficient. I need to attraction for no complacency. Growth just isn’t robust sufficient. And since it’s not robust sufficient, the debt hanging round our necks will weigh quite a bit. (…) It is a quite simple story. Sovereign debt has risen to 100% of GDP and progress just isn’t robust sufficient. So we have now an issue.”

Inequality, the impact of AI on labor markets or debt are just some of the problematic aspects of the economy that have been addressed during the week of conferences at the World Economic Forum. Geopolitical risks have come into focus.

The analysis of the risks has been accompanied by the confirmation of a notable resilience of the world economy, which has weathered a panorama of very high turbulence due to the tariff onslaught of the Trump Administration.

Ngozi Okonjo-Iweala, director of the World Trade Organization (WTO), referred to the surprise caused by this stability. “Global commerce has suffered the most important disruption in 80 years. There is completely little question about that. Global commerce guidelines have been undermined. But I feel the system has been constructed fairly solidly and it’ll take quite a bit to destroy it. Because after we do the evaluation – and we’ve not modified our methodology – we discover that 72% of world commerce continues to be carried out below WTO guidelines,” Okonjo-Iweala said.

But the confirmation of resilience does not diminish concern about the multitude of risks on the horizon.

Another element of tension concerns the action of Trump or his Administration against nerve centers in the economic sector, whether private or public, as shown by the recent lawsuit against JP Morgan and its CEO or the initiatives against the president of the Federal Reserve, which casts a long shadow on the future independence of the institution. Several central bank leaders published a letter of support for Jerome Powell days ago after criminal action was launched against him.

Christine Lagarde repeatedly insisted, all through her interventions, on the basic obligation of establishments to be rigorous and clear when providing knowledge and statistics, in what gave the impression of a veiled, oblique criticism of sure actions of the Trump Administration, for instance in opposition to an official who managed labor statistics. One of his interventions on the distinction between nominal and actual GDP evolution knowledge additionally gave the impression of a response to sure energetic statements by Trump in earlier days.