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23 Jan 2008 15:07
The annual Davos gathering of the world’s political and business elite opened on Wednesday with the fragile state of the world economy and stock-market turmoil casting a pall over the glitzy get-together.
In recent years the annual meeting in the Swiss ski resort has been held against a backdrop of bumper corporate profits, strong economic growth and tame inflation.
But as the 38th World Economic Forum opened, the global economy grappled with huge slides in stock markets, fears of a United States recession and rising oil, food and other commodity prices.
The agenda for the event reflected the prevailing mood, with a debate on “Planning for a global recession”, while another asked: “If America sneezes, does the world still catch a cold?”
“The US is not just going to sneeze and have a cold, it is going to have a protracted period of pneumonia,” New York University economics professor Nouriel Roubini told delegates in a packed opening debate that featured a flurry of recession warnings and downbeat forecasts.
This year’s invitation list for the Davos gathering, which takes place in an Alpine village in the snowy Swiss Alps, included 27 heads of state or government, 113 Cabinet ministers and several hundred corporate titans.
Among the presidents expected this year, Pakistan’s Pervez Musharraf, who is on a tour of Europe, is eagerly awaited, given the political instability in his country.
Other heads of state expected included Afghanistan’s Hamid Karzai, Israel’s Shimon Peres, Colombia’s Alvaro Uribe, Nigeria’s Umaru Yar’Adua and Gloria Arroyo from the Philippines.
Former US vice-president and climate-warming campaigner Al Gore, United Nations Secretary General Ban Ki-moon, Microsoft founder Bill Gates and British Prime Minister Gordon Brown are also star attractions.
US Secretary of State Condoleezza Rice was to open the event officially later on Wednesday, while British actress Emma Thompson and Irish rock singer/campaigner Bono added a smattering of glamour.
Earlier this week, it looked likely that Davos would begin with global stock markets in freefall, but they staged a spirited fightback on Wednesday following a shock US interest-rate cut by the Federal Reserve.
On Tuesday, the US Federal Reserve announced an aggressive 75-basis point cut in borrowing costs after a slew of data pointed to a slowdown in the world’s biggest economy.
This was the first time the Fed had changed interest rates outside its regular rate-setting meetings since 2001, days after the September 11 attacks. It was also its deepest cut since 1984.
Stephen Roach, a star economist and head of US investment bank Morgan Stanley in Asia, told delegates in Davos that the actions were “reckless” and “dangerous”.
“What worries me about the Fed is that, by easing aggressively on the basis of no new information other than the fact that equity markets were in trouble, they are sending a message that they’re there once more to protect the markets,” he said.
Given the market turmoil, other issues that form the core of this year’s agenda may be overshadowed.
Nevertheless, the prospect for peace in the Middle East will feature, alongside climate change, terrorism, nuclear proliferation, poverty and disease eradication.
Despite the sense of gloom about the economy and a long list of global ills to tackle, there was also lighter fare on offer for the 2 500 delegates who paid small fortunes to attend the meeting.
When night falls the rich, powerful and clever can attend sessions on everything from the science of love and “McMuseums” to Facebook and how much happiness the world can take.
A series of nightly parties also provide endless opportunities for winding down and shmoozing, with the annual party thrown by internet darling Google the highlight of the social calendar for many.
About 1 000 of the world’s largest businesses pay 42 500 Swiss francs (€26 300) apiece for annual membership to the Davos club—not counting the extra €11 000 per person to attend the meeting that opened ON Wednesday.—AFP
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