The world’s supposed great and good are gathered in Davis – as are Bono and Will.i.am, yawn – in circumstances that are hardly propitious. Shares around the world are still falling and doubts grow daily about the rate of growth in China: is it really 6.9 per cent, as claimed, or is there no growth at all?
WPP’s Sir Martin Sorrell, who’s also in Davos of course, reckons the real number is four per cent, which sounds OK but means that lots of investors (the main buyers on the Chines stock market are individuals not companies) will catch a cold colder than Davos. He forecasts three per cent growth for the world economy, the same for WPP.
WPP is a big investor in China as it is in the other so-called BRIC countries (Brazil, Russia, India and China) and Sorrell must be worried because Brazil and Russia are tanking too, hit by a double whammy of rapidly falling commodity prices and corruption. WPP and Publicis Groupe have grown to a significant degree through their investments in what were high growth markets like China and, if this goes into reverse, so will they.
For the record Sorrell says the things he worries about are: China, oil (the fall in the oil price has clobbered energy companies and, therefore, tax receipts around the world), the migration crisis, Europe (the two are linked, of course), Brexit (the possible UK exit from the EU) and cyber. Hackers are getting cleverer and that’s a big issue for companies stampeding into digital. Plenty of ‘grey swans’ there then.
Here’s Sorrell from a month ago, speaking at a IAA/CNN lunch. Marginally more optimistic than he is at Davos but hardly putting out the bunting.
Among other things he discusses WPP’s agency brands or ‘tribes,’ pointing out that JWT, for example, has defied all his efforts to kill it off. Think he’s joking. Making the point that clients want the best people on their business – his favoured ‘horizontality’ – rather than JWT, Y&R or whatever.
Hardly reassuring if you work for one of these entities.