Davos forum opens with focus on financial regulation, economic recovery

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Raghuram Rajan, a professor of finance at the University of Chicago, listens during a panel discussion on day one of the 2010 World Economic Forum (WEF) annual meeting in Davos, Switzerland, on Wednesday, Jan. 27, 2010. [CFP]

"We are in danger of attacking the most visible problems instead of doing what we need to do," said Raghuram Rajan, an expert from the University of Chicago School of Business.

"We could overregulate and go too far and whittle away too much, " Rajan told a session on the so-called "New Normal" of Global Growth.

"We need good regulation, better regulation but not more regulation," said Lord Levene, chairman of British bank Lloyd's, in a separate session.

The panelists also offered their insight on the global economy. "It will be a U-shaped recovery ... and there is a risk of a double-dip recession," said Nouriel Roubini, chairman of Roubini Global Economics Monitor, USA.

He noted that emerging market economies would do better than advanced economies. But the model of export-led growth in emerging economies such as China is now challenged by the fact that countries like the United States are importing less.

China's GDP will exceed that of Japan in 2010, noted Heizo Takenaka, director of the Global Security Research Institute at Keio University in Japan.

He predicted that the recovery of the global economy will be W-shaped, with China and other emerging economies as key contributors to the rebound in growth.

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