Recession is coming say executives

By PHILIP THORNTON

An overwhelming majority of 90 of the world's largest companies believe the world will plunge into a recession next year.

A survey of 90 executives of companies that are members of the World Economic Forum, a global think-tank, found that 79 per cent forecast an outright slump.

Half of those said a recession had been inevitable even before the September 11 attacks in New York and Washington.

More than two-thirds said they had frozen investment plans and a similar number forecast a fall in demand for their products.

The gloomy outlook came as Alan Greenspan, the chairman of the US Federal Reserve, said consumers and businesses in the United States "pulled back" from spending in the days after the attacks.

"The pronounced rise in uncertainty has dampened consumer spending and capital investment," he told the Joint Economic Committee of Congress.

In a move aimed at reassuring a jittery Wall St, Mr Greenspan said he believed the phenomenon had been "partial and presumably temporary".

He said monetary policy had had a "significant" impact. But he was not certain how much impact was still to flow through from the nine rate cuts that the Fed has made since the start of the year.

David Sloan, an economist at 4cast in New York, said Mr Greenspan was trying to talk up the economy, but added: "The bias still has to be toward further easing in monetary policy."