Pessimistic forecasts for the global economy continued to be made over the weekend at the World Economic Forum in Davos as economists and bankers predicted further problems for the US economy and growing pressure on other countries.

The annual economic and political summit, which ended yesterday, took place against the backdrop of economic turmoil and severe volatility in the global stock markets.

It was overshadowed by the US Federal Reserve's shock three-quarter point interest rate cut and the emergence of €4.9 billion losses at French bank Société Générale that were blamed on the actions of a "rogue trader".

Trade ministers met in the Alpine town over the weekend to discuss ways of advancing the stalled Doha talks on reducing barriers to worldwide trade to bolster the uncertain global economy.

However, the five-day forum was dominated by talk of the financial crisis.

Most economists blamed a runaway credit industry, lax lending practices and poor policing of the international banking sector for the US mortgage crisis and the resulting economic turmoil.

Not surprisingly, bear commentators grabbed the biggest headlines at Davos this year, with billionaire financial speculator George Soros garnering much attention by saying the current financial crisis was the worst for 60 years.

Bank of Ireland chief executive Brian Goggin, who attended meetings in Davos, said he has "never seen anything as pronounced as this - concern and fear has gripped financial markets".

In one of the main speeches on Saturday, Japanese prime minister Yasuo Fukuda said risks to the world economy were increasing against the backdrop of the sub-prime crisis and rising oil prices.

"There is no need for excessive pessimism.

"At the same time, however, we should respond quickly and should implement necessary measures," he said.

One possible solution suggested to keep a world economic slowdown at bay was to raise budget deficits, such as through tax cuts, in an effort to bolster the economies of certain countries.

The director general of the International Monetary Fund, Dominique Strauss-Kahn, said there would be a "serious slowdown" in the US and it needed a "serious" response.

He encouraged "fiscal stimulus programmes" to encourage economic growth in some countries.

"What we need is a more strong system of co-ordination. This co-ordination is going on among the central banks, but it is not enough on its own.

"We can't speak day after day about globalisation without at the same time having in mind that we need multilateral solutions."

John Thain, chief executive at investment bank Merrill Lynch, which lost almost $10 billion in the fourth quarter of 2007 due to writedowns related to the US subprime crash, said he believed there would be more losses on mortgage and mortgage-related products.

He added that the problems in the credit market were spreading to the consumer sector on credit card debt and car loans.

"As we look out into 2008 I think there will continue to be downward pressure on home prices that will continue to put downward pressure on all mortgage-related securities."

He said house prices in the US fell 7 per cent and that personal bankruptcies were up more than 40 per cent.

"The consumer sector is still going to be concerned.

"It will be a while before you see a return of normalcy in banking and [ capital] markets.

"The Fed [ rate] cut and the fiscal stimulus package are not going to help declining houses in the US; that problem is likely to continue." European Central Bank president Jean-Claude Trichet was urged by French minister for finance Christine Lagarde to heed growing demands for the bank to do more for economic growth when setting rates.

"I hope in addition to being in charge of price stability, he will be sensitive to comments from throughout Europe, not just from France."