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Jan 18, 2024

The view from the WEF at Davos: Inflation, AI and the problem with economists

Learnings for IROs from the latest meeting of world leaders

It’s probably not a surprise that inflation – and wider macroeconomic factors – were top of the agenda at this year’s meeting of the World Economic Forum (WEF) in Davos.

The impact of pandemic-era policymaking is still being felt across the globe, and world leaders are still rushing to contain runaway price rises that were put into motion by the economic shocks of the past four years: the pandemic, a shipping crisis and a war in Europe.

Many will have been hanging on the words of European Central Bank (ECB) president Christine Lagarde, who revealed it was ‘likely’ that Europe’s rate-setters would cut rates in the summer, with inflation appearing to be waning at an acceptable rate.

Lagarde also appeared to blame the markets – rather than hold the ECB responsible – for inflation spiraling. She had time to lash out at economists, too, labeling them a ‘tribal clique’ that had ‘blind faith’ in their models rather than reality.

Perhaps she will find kinship among our IRO readers, many of whom I’m sure have had to address an analyst’s model with reference to their company’s reality. But she may gain even more sympathy from an IR audience for her extension of this point to talk about understanding the non-economic factors that shape the globe’s capital flows.

Speaking about the pandemic and climate change, Lagarde said more consultations with subject experts – rather than economists – would put everyone in a ‘better position to actually understand these developments’. Like a good IR practitioner, she understands the importance of getting your subject matter experts in front of decision-makers, rather than relying on the cold, hard numbers alone.

Elsewhere, many world leaders and company CEOs were keen to discuss the impact of AI on the world of business. There were colorful banners promising the technology would change the world throughout the conference.

But several executives said the latest generative AI models still had a lot to improve before they became truly transformative. Cloud and internet security company Cloudflare CEO Matthew Prince told Reuters the coming months could feel like an ‘AI letdown’.

‘Everyone’s like, Yeah, I can build these cool demos, but where’s the real value?’ he asked, echoing a theme among business leaders attending the WEF meeting.

Others were concerned that there is little to safeguard users against ‘hallucinations’, whereby programs will generate completely fictitious information if they cannot access the answers they need, and that generative AI seems to recreate all the biases of its human creators.

That did not stop several world leaders, including UK chancellor Jeremy Hunt, from promising that their countries would be hotbeds of AI development – if they could attract enough investment.

For me, it showed that many folks – even those in the AI industry itself – still don’t completely understand the impact it will have on our world, but they do understand that it may well be significant. It’s a bet worth making for many.

IROs already know they have to be abreast of the latest AI developments as it is likely to radically change their job in the coming years. Luckily, some of my colleagues have already pulled together a comprehensive starting guide to using AI for IR, available here

What did you think the main takeaways from Davos were? Let us know in the comments on LinkedIn, or email us at


Laurie Havelock

Laurie has been part of the IR Magazine team for more than a decade, starting out as a reporter and research editor before becoming editor in 2023. He was previously acting business editor at the i newspaper and deputy business editor at The Daily...