Davos Forum 2025: The Intelligence Age of Global Economy and Collaboration

What is the Davos Forum?

The Davos Forum (World Economic Forum, WEF) is an international conference held in Davos, Switzerland, where global economic issues are discussed and solutions are sought.
It was established in 1971 by German economist Klaus Schwab as a non-profit foundation.
It gathers major economic leaders, scholars, and business people every year, holding significance to the point of being called the "World Economic Olympics."
It used to be Europe-centric, but now it deals with global issues.

Key Themes of the 2025 Davos Forum

Theme: “Collaboration for the Intelligence Age”

AI Intelligence Age: Transition to an intelligent economy led by Artificial Intelligence (AI).
How to Collaborate?: Discussion on collaborative measures to address the challenges the world faces.
Industry and Trust Rebuilding: Emphasis on securing trust and fostering talent in new industrial paradigms.
Climate and Sustainability: Reexamination of the importance of environmental and resource protection on a global scale.

Economic Outlook: Differences by Country and Region

1. Vulnerability of the Global Economy

The global economy is becoming increasingly vulnerable, with a high possibility of prolonged low-growth phases.
The global economy is moving heterogeneously, following "segmented" paths.

2. Evaluation by Major Country/Region

United States: Maintains the strongest economy, with moderate inflation and economic stimulus playing a leading role.
Europe & China: Increasing economic vulnerability; intensified concerns about Europe's energy issues and China's deflation.
India & Southeast Asia: Rapid economic growth. Emergence as new alternative regions by attracting manufacturing investments.

Inflation & Monetary Policy

United States: Sustained stable high inflation of 2-3%. Monetary policy likely to remain tight.
China: Increased risk of deflation (price declines). Aggressive economic stimulus is needed.
Changing Impact of Monetary Policy: The U.S.’s high-interest rates continue to draw in global capital inflows.

Key Risks and Change Factors

Complexity of Supply Chain
- Need to reduce dependence on China and explore alternative markets (India, Southeast Asia, etc.).
- Increasing fragmentation and uncertainty in the global value chain.
Sensitive Global Trends
- Geopolitical tensions (US-China trade war, Taiwan issue, etc.).
- Policy changes in the Trump 2.0 era: Strong shifts in trade, immigration, and foreign policies.
Climate Change and Demographic Shifts

Population decline: Decrease in China vs. increase in India. Direct impact on manufacturing and logistics movement.
Changes in environmental regulation patterns: The US, leading international changes with its withdrawal from environmental agreements, etc.

Response Strategies

Supply Chain Diversification
- Korean companies and the government need to secure key resources (lithium, rare earths, etc.) and stabilize the supply chain.
Risk Management
- Preemptively examine geopolitical risks and prepare countermeasures.
New Market Development

Focus attention on Southeast Asia and India.

Strategic Approach
- Consider a waiting strategy that responds to situations rather than drastic changes.

The Davos Forum 2025 discussed collaboration based on the AI intelligence era, the vulnerability of the global economy, and measures to overcome low growth.
Major countries have distinct growth patterns and vulnerabilities, with particular attention to the strength of the U.S. and the rise of India and Southeast Asia.
Key responses for companies and governments include diversifying the supply chain, managing risks, and developing new markets.

[More…]

2025 Economic Outlook: 5 Key Changes That Davos is Talking About
https://Next-Korea.com?s=economy
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https://Next-Korea.com?s=trump

*YouTube Source: [경제 읽어주는 남자(김광석TV)]

– 다보스포럼의 경고 “미국만 더 강해진다” “세계경제 취약해 질것” [경읽남 178화]

Japan's Interest Rate Hike and Global Economic Trends

1. Overview of Japan's Interest Rate Hike

Last Friday, Japan implemented a 0.25% interest rate hike, moving away from its long-standing low-interest rate policy.
This was an anticipated step, with two interest rate hikes expected this year, possibly reaching 1.0% next year.
The impact of the interest rate hike on the Japanese economy and the financial market's reaction are major topics of discussion.

2. Side Effects of Japan's Interest Rate Hike

Japanese banks may face increased bond losses due to the decrease in the value of government bonds they hold.
However, considering the current economic conditions in Japan, the interest rate hike is considered a necessary choice.
The 10-year Japanese government bond yield has already risen to 1.2%, and is expected to reach 1.5% by next spring.

3. Changes in Yen Carry Trade

The attractiveness of Yen carry trade, where funds are borrowed from Japanese banks for investment, is likely to decrease significantly due to rising interest rates.
Currently, the U.S. interest rate (4.58%) – Japan's interest rate (1.2%) = approximately 3.36%.
- At this level, the Yen carry trade is still effective.
If the U.S. interest rate drops or Japan's interest rate rises in the future, there is a possibility of a productive carry trade liquidation.

4. Impact of the Interest Rate Difference Between the U.S. and Japan

The profit from Yen carry trade depends on the interest rate difference between the U.S. and Japan,
but other various factors that investors consider in the global market also have an impact.
For example, a drop in the stock prices of U.S. tech and big tech companies could trigger Yen carry liquidation.

1. U.S. Major Big Tech and AI Investment Trends

The U.S. stock market has seen significant increases in stock values over the past two years, driven by an AI boom.
In particular, the top 10 companies by market capitalization within the S&P 500 account for 40% of the market share, most of which are big tech and AI-related companies.
It is noted that if the AI investment frenzy cools down, it could lead to a weak U.S. stock market.

2. The Rise of China's AI ‘DIIPSCK’

Recently, Chinese AI has been gaining global attention for its cost-effectiveness and performance.
Competing with U.S. AI technology by using deep learning with H800 GPUs, it is challenging the global market.
In terms of cost alone, they are boasting the possibility of developing an AI model close to ChatGPT at around $570,000.
However, this figure may not include the costs of smuggling advanced GPUs or additional labor costs.
DIIPSCK is building low-cost, high-efficiency AI technology with a simpler and more efficient training environment.

3. Crisis for U.S. AI and NVIDIA

The emergence of technologies like DIIPSCK raises questions about NVIDIA's GPU market dominance.
If cost optimization is achieved for AI training technology, demand for high-performance GPUs is expected to decrease.
This may consequently lead to pressure on big tech companies to reduce overall costs.

Major Market Outlook

The AI technology and GPU markets are likely to enter a transitional period as they develop more efficient cost reduction methods.
- This will directly lead to the growth and restructuring of new AI startups.
However, the risk for NVIDIA is currently facing downward pressure on prices with the increase in the supply of used GPUs.
Depending on whether the AI trend continues, the prospects for big tech and the global stock market are expected to be mixed.

< Summary >

Japan raised interest rates by 0.25%, possibly reaching 1% next year.
This change impacts the Japanese economy and the global carry trade investment environment.
The emergence of China's DIIPSCK AI is shocking the U.S. big tech and GPU industries.
The shift towards an efficiency-focused AI technology competition is expected to cause changes in the GPU market and big tech.

[More…]

*YouTube Source: [Jun’s economy lab]

– 중국산AI에 무너지는 미국증시(ft.엔비디아, 딥시크)