{"id":24345,"date":"2026-01-25T22:22:30","date_gmt":"2026-01-25T22:22:30","guid":{"rendered":"https:\/\/www.rbc.com\/en\/?post_type=rbc_tl&p=24345\/top-risks-2026-a-dependency-trap"},"modified":"2026-01-29T15:10:35","modified_gmt":"2026-01-29T15:10:35","slug":"davos-26-making-sense-of-a-new-world-order","status":"publish","type":"rbc_tl","link":"https:\/\/www.rbc.com\/en\/thought-leadership\/the-trade-hub\/davos-26-making-sense-of-a-new-world-order\/","title":{"rendered":"Davos ’26: Making sense of a new world order"},"content":{"rendered":"\n
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The World Economic Forum this year became a tale of two Davoses.<\/p>\n\n\n\n

Inside the main Congress Centre, a record number of attendees, including 850 CEOs, 80 tech billionaires and founders, hundreds of ministers and 65 heads of government spent the week hearing about the decline of globalization and the inward turn of societies.<\/p>\n\n\n\n

Outside, it was a very different world. On the town\u2019s main promenade, you couldn\u2019t walk 50 metres without feeling like you were in a mash-up of Wall Street, Silicon Valley and the United Nations, as countries from Brazil to Indonesia and companies from Tech Mahindra to Pinterest pitched themselves to the passing kaleidoscope of a crowd.<\/p>\n\n\n\n

Mark Carney called this new environment one of \u201cvariable geometry.\u201d Others called it a new age of \u201cmulti-alignment\u201d\u2014as if the global economy is becoming a bit more of a bartering and babbling souk <\/em>than a tightly wired marketplace. By any name, the emerging world order, or disorder, seems as slippery and risky as the icy streets of Davos. Here\u2019s some of what to look out for:<\/p>\n<\/div>\n<\/section>\n\n\n\n

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Trump\u2019s World: America First or America Alone?<\/h2>\n\n\n\n

Last year, a day after his second inauguration, Donald Trump spoke by video to the Forum and promised a golden age for America. This time, he came in person to proclaim victory. With five cabinet secretaries and hundreds of American CEOs in tow, the President spent an extraordinary two days in the Swiss Alps projecting a 21st century version of American power. This is no stay-at-home superpower. In Trump\u2019s vision, the world will trade and prosper more than ever, on America\u2019s terms.  Close to three-quarters of global trade is still compliant with WTO rules. Inventory build-ups helped many companies escape the initial tariffs. A greater impact may come this year. But for the most part, \u201cit\u2019s still holding,\u201d said Christine Lagarde, head of the European Central Bank, arguing the global economy is so intricate and intertwined even the U.S. cannot unravel it. Trump\u2019s more mercantile Pax America is not just economic. He came with an unsolicited bid for Greenland that was rejected by his closest NATO allies. He left with a Board of Peace, supported by an unlikely collection of 19 countries with a combined GDP of $5 trillion, roughly equal to Germany. Only four (Albania, Bulgaria, Hungary, Turkiye) are in NATO, and only four (Argentina, Indonesia, Saudi Arabia, Turkiye) are in the G20. Will Trump be able to expand America\u2019s reach without stronger partners? Or is this the new geometry of power?<\/p>\n<\/div>\n<\/section>\n\n\n\n

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Carney\u2019s World: Rupture or restoration?<\/h2>\n\n\n\n

Mark Carney, long viewed as the quintessential \u201cDavos Man,\u201d gave a keynote speech that was widely celebrated for capturing the distraught mood of many there and crystallizing the desire for a new approach to international affairs. His tag line\u2014\u201cnostalgia is not a strategy\u201d\u2014resonated. Now he has to deliver on diversification. There\u2019s no easy path. Canada\u2019s closest allies in Europe are each struggling, economically and politically, weakened by the Ukraine war, immigration crises and a growing appeal of nationalism, which is now the biggest political force on the continent. Europe\u2019s biggest economy, Germany, narrowly escaped a recession last year, after two years of decline. Chancellor Friedrich Merz called Europe \u201cworld champions of over-regulation\u201d and at risk of losing its unity if it doesn\u2019t reform. Canada will need more distant partners, too, particularly China and India, which the WEF estimates will account for nearly 40% of global economic growth over the next five years. Both emerging giants can be as tough as Trump when it comes to trade. The Persian Gulf beckons, too, with trillions of dollars of capital investment. But there, too, a new generation of economic partners have different political and legal systems\u2014and social customs\u2014to the neighbourhood where Canada grew up.<\/p>\n<\/div>\n<\/section>\n\n\n\n

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\u201cNo King\u201d comes for dollar<\/h2>\n\n\n\n

High above Davos, someone carved a message into a mountaintop glacier: \u201cNo King.\u201d It was probably meant for the visiting U.S. President but equally could have been a message from European markets to the mighty greenback. King Dollar had a rough week, facing big questions as global trade winds shift, and countries and companies look to re-orient capital flows. The dollar still dominates 88% of global foreign exchange transactions, and 54% of global trade, which is why so many still cite TINA (There Is No Alternative). Or is there? The WEF opened to the startling news that Denmark\u2019s largest pension funds had dumped U.S. treasuries in retaliation to the Greenland threat. A risk-off America vibe sent U.S. bond yields higher, reducing hopes for broader rate cuts. In moments like this, investors tended to stay in America, through real estate or stocks. This time, at least among Europeans, there was plenty of corridor chatter about a secular shift forming. One fund manager said his investors had asked him to sell down U.S. holdings. A few American tech executives said long-time European clients were cancelling orders. The euro, yen and Canadian dollar may play greater roles. The renminbi should gain prominence, although is years away from being a serious global alternative. Uneasy lies its head, but there\u2019s still only one king wearing the currency crown.<\/p>\n<\/div>\n<\/section>\n\n\n\n

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Davos meets (and greets) state capitalism<\/h2>\n\n\n\n

The World Economic Forum was created in the 1970s to help Europe avoid the rise of socialism, and turn instead to free markets. A half century later, much of the West is again turning to the state to meet various economic ambitions\u2014and the risks are evident. As countries, Canada included, seek to build back their militaries, build up their own technology foundations and become less reliant on the U.S.\u2014home to roughly half the world\u2019s financial capital\u2014they are looking to leverage their own balance sheet and use other tools to direct capital to national priorities. These ambitions are so pronounced that many prime ministers and presidents seemed more like investment bankers working the Davos crowd. Advanced economies like Australia, Norway, Germany and South Korea do indeed have capacity to borrow more for investment, as do many emerging economic powers like Saudi Arabia. But capitalism is about more than capital; it\u2019s about putting capital to work, with results. Singapore\u2019s president, Tharman Shanmugaratnam, offered some sage advice, urging these new nation-state capitalists to be ruthless with investing, and with spending and regulation, too. Growth requires governments to focus on productive investments, including education, rather than redistribution\u2014and a humble recognition that governments are inherently weak at building economic enterprises. If this new shot at state capitalism is to work, a new mindset will be needed, too.<\/p>\n<\/div>\n<\/section>\n\n\n\n

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