WEF searches ways to reboot global economy

The world's top leaders and chief economists are looking for solutions to catalyze growth as they are gathering in Davos for the World Economic Forum (WEF) Annual Meeting 2016.

The global economic growth did not exceed 3 percent in last year and 2016 outlook is similarly lackluster.

The International Monetary Fund (IMF) has recently reduced its global growth forecasts to 3.4 percent in 2016, and PwC's Annual Global CEO Survey found that just 27 percent of business leaders think growth will improve this year.

Head of the IMF Christine Lagarde has called it the "new mediocre", but economists warned that it could be worse.

They warned that the migration crisis, inequality, the gender gap, sustainable development and how to transition to a low-carbon economy, all the challenges ahead will all be near impossible to achieve without robust economic growth.

Enda Kenny, Taoiseach of Ireland and also a panel member, laid out his 3-point plan to manage Ireland's recovery: jobs, welfare reform and housing.

The nation has come a long way since the dramatic shocks of 2010, and is now the fastest growing economy in Europe.

"Five years ago we were under the hammer of a troika," said Kenny, adding "We had to make very difficult decisions to avoid more boom and bust."

Ireland's growth was around 7 percent in the third quarter last year, a remarkable turnaround.

As for emerging markets, Brazil's Finance Minister Nelson Henrique Barbosa-Filho said his country is in a transitional phase.

"Brazil benefited from a global commodities boom which reduced poverty and improved productivity. This stage has passed, and we need to prepare for a new phase for the global economy," he said.

"Countries all over the world are undergoing a structural transformation. This is a hard process, and it almost never happens smoothly," Nobel economist Joseph Stiglitz, also a member of the panel said.

How can the governments catalyze growth? Kenny's answer is to invest in people.

"An economy is an engine," he said, "and it's an engine that can provide resources to invest in people."

"But countries do have to manage their public finances prudently, allowing them to make better decisions," he added.

The circumstances in each country are different, said Stiglitz, but in the U.S. reforming the tax system would be a good start.

He said the current system in the United States is regressive, while the country has underinvested in infrastructure for far too long.

In addition, Stiglitz said the government has to take a leading role in promoting technology as well as in creating jobs.

"If those people who lose their jobs in the Fourth Industrial Revolution can find a new one, then it may be a smooth transition," he said. Endit