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Financial crisis concern prevails at Summer Davos meeting

(Xinhua)
Updated: 2008-09-26 16:33

The current financial turmoil in the United States is the main concern of the world's chief executive officers and investors gathering on Friday for sessions before the annual meeting of the New Champions 2008, organized by the World Economic Forum.

Three speakers at the session, all heads of the world's major accounting firms, agreed that they did not foresee a global recession following the current financial crisis.

"We are currently at a very difficult spot," Samuel Dipiazza, chief executive officer of PricewaterhouseCoopers, told reporters, "but global economic recession is not likely, even though there is a world economy slowdown, because some emerging markets will keep driving the growth."

The discussion took place amid a global credit crunch which originated in the US starting with the collapse of Lehman Brothers Holdings Inc, Merrill Lynch & Co and Bear Stearns, and the crisis is still spreading to plague other large financial institutions. The world's stock markets recently tumbled as a result.

"Individual industries in individual markets are going through a contraction, but as for the economy overall, it's not happening, " said Deloitte Touche Tohmatsu Chief Executive Officer James Quigley. Both Dipiazza and Ernst & Young LLP Chief Executive Officer James Turley said they are optimistic about future actions to be taken by the US government.

The Bush administration proposed a 700-billion-US-dollar government rescue plan to buy distressed assets from troubled lenders, but a top-level White House meeting failed to reach consensus on the plan on Thursday.

Turley also believed the world's central banks would help ensure the credit would be available.

Dipiazza said it would have to wait for two or three weeks before reaching a conclusion and see how the US government would deal with the crisis.

Quigley echoed Dipiazza's comments and said, "The global economic recession will not occur, especially in emerging markets in Asia-Pacific areas, such as China, where it is keeping building up infrastructure, and developing consumer-based economy that is not so much relying on export." While financial upheavals were in the past usually reaction to changes in the real economy, this time there are rising concerns over the impact of the financial crisis over the real economy, or the other way around.

"The situation is more challenging than we thought a few months ago," the PWC CEO acknowledged.

Fred Zuliu Hu, chairman of Greater China, Goldman Sachs (Asia), said at a different session on Friday the global credit turmoil would not have a major impact on China's financial sector due to limited exposure of Chinese lenders to the risks.

The New Champions 2008, the second such annual meeting organized by the World Economic Forum and also dubbed as "Summer Davos", is to be held in Tianjin from September 27 through 28. Chinese Premier Wen Jiabao is expected to address the meeting on Saturday.