DAVOS, Switzerland (CNN) -- Bleak forecasts for the global economy dominated Wednesday's opening of the annual World Economic Forum in Davos, but business and government leaders were divided over the possibility of a global recession.
Delgates stroll throught the congress center of the World Economic Forum in Davos.
The prospect of a major downturn was already on the agenda for the 2008 meeting that gathers some of the world's most powerful people, but the U.S. Federal Reserve's suprise 0.75 point rate cut move to calm turbulent markets placed it under fresh scrutiny.
Former UK Prime Minister Tony Blair said he expected financial concerns to dominate the talks.
"I think the context in which Davos takes place, especially with so many leading people from the business and finance world, it is bound to be dominated by the situation in the world economy," he told a press conference.
But Blair, who is co-chairing this year's meeting, said he hoped anxieties over the health of the world's economy would not detract from other key topics, including his own agenda of driving Middle East peace talks.
"One of the good things about Davos is people are able to look beyond the immediate," he said.
Financial concerns and Washington's role in shaping the world's financial future are already on the agenda at the five-day meeting, where one of the key questions this year will be: "If America sneezes, does the world still catch a cold?"
Soaring oil prices, the falling dollar, rising food prices, trade imbalances and a tide of protectionism have added to the broad economic woes linked to the slowing the U.S. economy, and potentially the rest of the world.
Delivering a keynote speech U.S. Secretary of State Condoleezza Rice assured the audience that the United States "will remain an engine of economic growth".
Chevron, CEO David J. O'Reilly, another co-chair, said he believed the current crisis would not have any lasting affect.
"I think there is a degree of pessimism that belies what's happening really," he told reporters.
Others were more pessimistic, predicting a longer-term slump that could reach beyond U.S. borders.
Predicting a sharp downturn, World Bank head Ngozi Okonjo-Iweala told CNN: "I'm worried I think the slowdown is very sharp, we hope that the stimulus that has been given by the cut in interest rates by the Fed will help ward of hard times. Watch Okonjo-Iwela talk about her concerns. »
"I've certainly been in the 'hoping for a slowdown' category, but over the last week or so I think the psychology has shifted so I'm going into the recession category," Mark Gottfredson of financial strategists Bain and Company told CNN. Watch Gottfedson talk to CNN's Richard Quest. »
"I think at the moment it's too early to say if were going to have a recession in either the UK or continental Europe," Chris Giles, economics editor of the Financial Times told CNN.
"There's quite a lot of momentum in the economies yet, but there is a big risk and the risk is that what we've seen in financial markets and banks is there in trouble if they stop lending and that then brings the economy into more trouble and people start defaulting on their loans and you get a vicious circle.
"We won't know for six months if that will transpire but if it does it will be pretty ugly."
Sam Di Piazza, Global CEO for PricewaterhouseCoopers, added: "We still believe it's a slowdown, it's a close call... but the U.S. has a good chance of staying out of recession." See CNN's Recession-o-meter
Addressing the 2,500 delegates -- inlcuding Afghan President Hamid Karzai U.N. chief Ban Ki-moon and Renault boss Carlos Ghosen -- at the opening session, Davos founder Klaus Schwab warned that dour forecasts were as damaging as the hubris of previous years.
"This year we are experiencing doom and gloom as the world enters uncharted territory. Irrational pessimism is as damaging for us all as irrational exuberance," he said.
"But if we are prepared to collaborate -- on a global level and incorporating all stakeholders of societ, and if we truly look for innovative solutions -- snwers taking into account the new power equations which are reshaping global society -- only then do we have the capability to bring the riskus under control and to restore sound global growth conditions." E-mail to a friend
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