Luxury Mercedes Benz cars and a poster for U.N.’s World Food Program are seen at a drop-off point for participants of the World Economic Forum in Davos, Switzerland, on Tuesday. Climate change will be among the issues at this year’s meeting.AP photo
DAVOS, Switzerland — Worries that a stumbling U.S. economy will lead to a global slowdown hung over the World Economic Forum on Tuesday as politicians and business leaders arrived ahead of the five-day event.
Stock markets in Europe and Asia had dropped for a second day before the U.S. Federal Reserve’s surprise cut in its benchmark refinancing rate to 3.5 percent from 4.25 percent in at attempt to restore stability to the volatile markets.
Andre Schneider, chief operating officer and managing director of the WEF, said economic developments would be a big part of the agenda at the annual meeting of 2,500 political and business leaders in the Swiss Alps.
“Now, a major recession or a stock market downturn has a lot of implications beyond pure economic reasons, so frankly if we would not be debating this here then we would not be doing our job, either,” he told AP Television News.
The meeting, which starts today, will also cover issues such as a lasting peace in the Middle East and stemming global terrorism.
A year ago, Davos attendees predicted that the economy would move ahead with confidence. But after the credit crisis brought on by massive exposure to subprime mortgage securities, the prevailing mood is one of caution.
Asian stocks had plummeted Tuesday on skepticism that President Bush’s proposed $150 billion economic stimulus package could keep America’s economy from sliding into a recession. But European stocks rebounded after the U.S. rate cut.
Canada quickly followed the Fed’s move, lowering its key rate by a quarter of a percent to 4 percent. The European Central Bank held steady at 4 percent.
India’s minister for commerce and industry, Kamal Nath, told AP Television that given the emergence of economies like his country and China, the U.S. slowdown may not likely be as pronounced globally as it has been in past years.
“The whole architecture has changed,” he said, adding that growing economies have provided new engines of growth. “You have sovereign funds, and the United States is not the only (thing) which is driving ... the global economy now.”
Leslie Maasdorp, vice chairman of Britain’s Barclays Capital, said the economic statistics from Asia still look fairly robust. “You don’t have a lot of fundamental economic data coming through which suggests that the global economy is headed for a recession,” he said.