Davos, amid threat of Trump avalanche, AI earthquake | Number Theory

What makes things even worse is that Trump is not the only variable as far as the global economy is concerned

The World Economic Forum (WEF) is one of the most influential gatherings as far as global capitalism is concerned. The high and mighty of business and policy meet in the backdrop of the snow-covered Alps and often discuss what the future can hold. WEF’s glory days have been associated with the rise of globalisation and free markets. In fact, what is today the WEF used to be just a European gathering before the end of the Cold War.

Reuters file photo

This year’s WEF meeting, however, is taking place in an environment which embodies anything but optimism and confidence. The biggest threat to the Davos sentiment, ironic as it sounds, comes from one of the biggest delegations this time, namely, US President Donald Trump’s. What makes things even worse is that Trump is not the only variable as far as the global economy is concerned. Here are four charts which capture how the world has changed since the last Davos gathering.

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  WEF’s own risk assessment has shifted for worse between 2025 and 2026

  The WEF’s Global Risks Report 2026 captures this shift starkly. Experts across government, business, academia and civil society see the world entering 2026 in a far more volatile state than a year ago. Half of those surveyed expect the next two years to be turbulent or stormy, reflecting heightened fears around geo-economic confrontation, war, misinformation and social polarisation. The longer-term view is scarcely reassuring. These apprehensions are in keeping with the larger sentiment as seen in indicators such as the global uncertainty index. Notably, these views were expressed in surveys done between August 12 and September 22 last year, before the most recent shocks further destabilised the global order. Things have become significantly worse in the more recent past. Even as Trump leads one of the biggest US contingents into WEF this year, he has gone around precipitating one of the biggest crises in relations between the US and its European allies after his repeated threats to take over Greenland. “This year’s gathering is taking place against the most complex geopolitical backdrop since 1945,” World Economic Forum Chief Executive Børge Brende said on a media call before the event.
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  And an IMF report released yesterday, underlines the systemic importance of AI in global economy

  The IMF’s January update to the World Economic Outlook shows that the share of IT investment in US GDP reached its highest levels since 2001 last year, drawing a possible parallel with the dotcom era crash in the US economy. To be sure, the IMF report does say “that potential overvaluation for the broad equity index in the United States is only about half that of the dot-com episode” even as it highlights the it would be imprudent to write off systemic risks due to three reasons, namely, AI stocks becoming a primary driver of equity market gains, many AI investments being germane to debt markets rather than equity markets and much higher level of market capitalisation in the US than during the dotcom era. All this means that an AI crash could very well be around the corner.
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  Gold and the return of safe havens

  The probable perfect storm of geopolitical instability and the bursting of the AI bubble has made investors and markets risk averse in a big way. This is best seen in the almost unprecedented and ongoing rally in gold prices. In dollar terms, gold has gained 68% since the last WEF meeting, much more than what was seen during previous shocks such as the 2008 Global Financial Crisis.
• An increasingly belligerent US President threatening his country’s long-term strategic allies and a once-in-a-lifetime technological shock and the financial disruption which could accompany it, even on their own, would be enough to put the global economic and policy elite on edge. That the two have come together means those partaking in Davos this year may be sweating notwithstanding the snow-covered landscape.