The annual Davos gathering of the world's political and business elite opened Wednesday, dominated by the deep cut in US interest rates aimed at preventing recession and supporting world stock markets.
In recent years the annual meeting in the Swiss ski resort has been against a backdrop of bumper corporate profits, strong economic growth and tame inflation.
But as the 38th World Economic Forum opened the global economy is now faced with huge slides in stock markets, slowing growth, the subprime crisis and increasing oil, food and other commodity prices.
"I don't know whether there will be a recession in the United States, but I do know that one year ago, at this time, things were very rosy," Rahul Bajaj, chairman of Indian industrial group Bajaj Auto told AFP in Davos.
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.
The rate cut came after US President George W. Bush announced on Friday stimulus package, valued at between $140billion and $150 billion that showed how real the danger of a recession is.
"The Fed cannot prevent the (US) economy going into recession," economics professor Nouriel Roubini said at a session on the world economy at Davos. "My view is that world economy cannot decouple from a US hard landing."
After a wildly volatile day for markets on Tuesday, Asian and European markets rebounded, but traders and analysts warned the fix could turn out to be only temporary -- and that fears of a US recession were far from over.
"Europe is not going to get a special dispensation from the global slowdown," Stephen Roach, star economist and US bank Morgan Stanley, said in Davos.
In the run-up to the event, WEF founder Klaus Schwab hoped that the meeting would avoid "excessive pessimism."
This year's invitation list includes 27 heads of state or government, 113 cabinet ministers and several hundred corporate titans.
The agenda for the event reflects the prevailing mood, with debates scheduled on subjects such as "planning for a global recession" while another asks: "If America sneezes, does the world still catch a cold?"
The role of emerging countries in Asia, Eastern Europe, Latin America and the Middle East will be crucial in answering this question and many of the people best placed to hold forth on the subject will be in Davos.
Among the presidents expected this year, Pakistan's Pervez Musharraf, who is on a tour of Europe, was expected to attract a lot of attention given the turmoil in his country.
Other heads of state present included Afghanistan's Hamid Karzai, Israel's Shimon Peres, Colombia's Alvaro Uribe, Nigeria's Umaru Yar'Adua and Gloria Arroyo from the Philippines.
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 is likely to be a major theme, as will climate change, terrorism, nuclear proliferation and poverty and disease eradication.
Other big name attractions included former US vice-president Al Gore, UN Secretary General Ban Ki-moon, Microsoft founder Bill Gates and British Prime Minister Gordon Brown.
British actress Emma Thompson, Brazilian author Paulo Coelho and Irish rock singer/campaigner Bono add a smattering of glamour and when night falls, the 2,500 delegates can attend sessions on everything from the science of love to how much happiness the world can take.
Parties each night also provide delegates with endless opportunities for winding down with the annual party thrown by Google - the highlight of the social calendar for many. (AFP)
Davos opens amid economic turmoil