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. Last Updated: 07/27/2016

Corporate Confidence in a Big 2006

Not even the unpleasant surprise of weak fourth-quarter growth in the United States could shake the strong belief at this year's World Economic Forum that 2006 will be a good year for business. The world economy is starting to fire on multiple cylinders, with decent prospects for growth in Japan and the euro zone, and China promising to generate more domestic consumption.

Concern about global imbalances and the sustainability of the U.S. consumption binge has faded -- much too quickly -- after a remarkably resilient 2005. Business scents the sweet smell of success. The integration of China and India into the world economy when technology is digitizing and disaggregating old business models offers companies huge opportunities to cut costs and raise efficiency.

The backlash against outsourcing and offshoring is easing, though there is still deep concern about jobs for less-skilled workers. As Larry Summers, the former U.S. Treasury Secretary, observed, though we talk about the challenge of globalization, the real threat is local disintegration.

Reinforcing the general optimism is the return of a confident technology sector, once again dazzling the world with new possibilities, not just for business but for global public policy too, whether it be in the energy sector, with efforts to reduce oil dependency, or empowerment of the poor in Africa or India. Incumbent businesses and established institutions, beware: The greatest danger may lie in complacency. Concerns about global economic imbalances have eased markedly. However, it still remains doubtful that a transition from U.S. consumer-led global growth to expansion led by the euro zone, Japan and China will proceed smoothly.

Some essential pieces of the optimists' jigsaw are still missing. The general mood of profit and possibility makes the reluctance of the business leaders in Davos, Switzerland, to unleash a global investment boom all the more puzzling. Part of the answer must be that they still privately fear that the current pattern of growth is not sustainable.

Yet some of the answer surely lies outside the world of business. Alongside corporate confidence is a nervous awareness of the rapid transmission of unforeseen risks -- whether the victory of Hamas in last week's Palestinian elections, the spread of bird flu from Asia or the development of Iran's nuclear program -- in an ever-more interconnected world.

Turbulent world politics crowd in on the comfortable business environment. One reason why a successful conclusion of the Doha trade round is so important is that it would not just enhance commercial opportunities, but it would also demonstrate the international community's capacity to defy the forces of disintegration and harness the power of commerce to bind it closer together.

This comment first appeared as an editorial in the Financial Times.