With a strengthening economy and plummeting prices of fuel, USA is all set to pull investments on the global platform. The World Economic Forum at Davos painted a similar picture. With the phase of recession in Russia, stagnation in Brazil and struggle in India for the implementation of economic reforms, it seems that the US is playing a magnet for the investors.
Even though the Wednesday’s retail sales report were disheartening, yet the U.S. economy managed to grow at its fastest pace in the past ten years, in the third quarter of 2014, with an annualized growth rate of 5%.
THE LAND OF MILK AND HONEY
“The pendulum has shifted. The US is now regaining its position in the world economy. It is the place where recovery took hold in its most robust way”, said Jacob Franknel, the chairperson of JP Morgan Chase’s (JPM, Financial) international arm. Franknel has been attending the forums at Davos since 1980s.
Though the basic focus of the World Economic Forum is generally on the development and growth of the developing economies, but this year’s meeting scheduled from 21st to 24th January is not very excited about the growth prospective of the developing countries. This year the strength of the U.S. is definitely going to be a major theme in Davos, said Dominic Barton, global managing director at consultant McKinsey and Company. “The US is very economically dominant and powerful and I think it’s just going to be better.”
THE MONEY MAKING SUMMIT
Such forums act as a platform for the top chief executives to interact with each other off the podium. Such interactions easily get converted into acquisitions. In 2014, such talks lead to a business of $259 billion in foreign takeovers, the highest number since 2007. This year the figures could gallop beyond expectations.
Germany’s Merck (MRK, Financial) made the biggest deal of the last year’s bunch with a proposed $17 billion takeover of Sigma-Aldrich (SIAL, Financial) a producer of chemicals used in laboratories.
The interest is global in nature. In May, Japanese distiller Suntory completed a $16 billion acquisition of 219 year old bourbon producer Jim Beam. A few months later Calgary based Encana (ECA) made a $5.9 billion bet on the Texas oil patch with its purchase of Athlon Energy (ATHL, Financial), the largest ever US oil and gas deal by a Canadian company. And in March, Qatar’s sovereign wealth fund joined a group of investors that agreed to buy a half of American Express’s (AXP, Financial) business travel unit for $900 million.
Though there is an obvious lack of interest towards developing countries, yet clearing off Asia, Latin America and Africa is not in the picture. According to International Monetary Fund, considering the purchasing power, China left us behind in the race of economy in the previous year. While the Indian Prime Minister Mr. Narendra Modi is seeking wider reforms in order to accelerate the growth.
CONCLUSION
However everything is not as hunky and dory as it seems to be. The forum this year has chalked out some major issues that would have a great impact on the decisions of the decision makers. Previous year the WEF’s Global risk report focused on issues like enhancing debt levels and fiscal crises. But this year has seen international conflict and environmental concerns making place in the 28 risks highlighted by the 900 experts of the forum. Surely the countries would try to get rid of these problems first, because for a healthy business to flourish one does require a peaceful and green planet to live first.
