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World Forum, Back in Davos, Confronts Slow Growth January 23, 2003 By REUTERS Filed at 12:09 p.m. ET DAVOS, Switzerland (Reuters) - Worries over a fragile global recovery haunted the opening of the World Economic Forum on Thursday as business leaders cautioned that a war with Iraq would stunt already weak growth. ``Uncertainty is weighing on our economy and dynamics and the will of people to move forward,'' said Bertrand Collomb, chief executive of French construction materials maker Lafarge. The prospect of war overshadowed the annual retreat for world leaders in this Swiss ski resort, one of the highest profile gatherings of politicians and business people. Even without a conflict, business leaders and top economists said they expected a long, slow haul back to healthy growth worldwide, and they are relying on the United States to providing the muscle. Yet America lacks its usual dynamism. ``The problem is, we're just coming out of a recession and we should be growing four to five percent,'' said Henry McKinnell, chief executive of U.S. drug maker Pfizer Inc. Instead of that the U.S. economy is expected to grow only 2.8 percent in 2003, according to the Blue Chip economic survey of business economists, a level in line with average forecasts here. It may even have stalled late last year. This shaky outlook was underlined by some of Europe's top technology companies. Finnish cellphone maker Nokia, German power generator to telecoms equipment group Siemens and Franco-Italian chip maker STMicroelectronics all gave cautious near-term forecasts on Thursday. Don Peterson, chief executive of U.S. communications equipment maker Avaya, said he had given up making forecasts altogether. ``The probability to get it right is so low,'' he said. WAR LOOMING A possible war in Iraq, coming after three tough economic years in many parts of the world, is making consumers and businesses even more hesitant, said Eric Benhamou, chief exective of U.S. handheld computer maker Palm. ``The wait for a war is worse than the actual event,'' he said. For the struggling Japanese economy, which is buckling under high oil prices as a result of a looming war in the Middle East, a quick and peaceful solution would be best. ``Whether it's a short war or a long war, the best answer is: no war,'' said Ujiie Junichi, chief executive of one of Japan's largest financial services companies, Nomura Holdings. Some 2,300 delegates from 104 countries are taking part in this year's World Economic Forum. To protect against possible terrorist attacks, Switzerland is mounting its biggest ever security operation at a cost of some $10 million, equivalent to almost $5,000 per delegate. Hundreds of police and soldiers are patrolling the small Swiss mountain resort, where light snow fell earlier in the day. Davos is not on commercial airline routes, and government officials have said Swiss fighters could shoot down any light plane seeking to fly by if it ignores orders to change course. The Forum returns to Davos this year after transferring to New York in 2002, partly out of solidarity with the United States following the September 11 attacks. U.S. WEAKLING The fallout from those attacks still is uppermost in the forecasts provided by prominent economists. Stephen Roach, chief economist at Morgan Stanley in New York who long has forecast the slowing U.S. economy will slip back into a double-dip recession, was especially dour. ``The engine of the world, the U.S., is struggling,'' he said, adding that he doubted it could provide much power. The United States is still mired in a post asset-bubble hangover and growth last year was ``pathetic,'' he said. Moreover, it probably stalled in the final few months of 2002. ``If we went into war with a big (economic) cushion, we might be able to come out of it. When you hit with a zero growth rate, we will go into recession,'' Roach told Reuters. If that happens, Roach said he expects the U.S. economy to contract by 1.0 to 2.0 percent for several quarters, even if oil prices are high for only a few weeks. But Gail Fosler, chief economist for the Conference Board, a research group funded by 5,000 businesses worldwide, said a rebound in business investment and solid consumer demand should fuel U.S. growth of 3.5 percent on average in 2003. ``The big wild card is: Will there be an event, or will war take a course that scares the wits out of the American consumer?'' she said. NO LIGHT FROM EUROPE, JAPAN Europe and Japan were struggling with other problems. Growth in Germany, which accounts for one-third of the euro zone economy, is stalled. Juergen von Hagen, economics professor at Bonn University, doubted that labor and social benefit reforms needed to restore European growth to its 2.5 percent potential would be achieved any time soon. As for Japan, Haru Shimada, an adviser to Japanese Prime Minister Junichiro Koizumi, said a government plan to accelerate bad loan write-offs, while badly needed, would worsen unemployment in a country that has seen 12 years of virtually flat growth. http://www.nytimes.com/reuters/international/international-economy-davos.html?ex=1044355282&ei=1&en=5b7a7d5000949bbe HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact [EMAIL PROTECTED] or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to [EMAIL PROTECTED] Copyright 2002 The New York Times Company <A HREF="http://www.ctrl.org/";>www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance�not soap-boxing�please! 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