A gloomy forecast about the world economy greeted the leaders when Stephen Roach, chief economist of Morgan Stanley financial services company, said markets and officials had developed "a dangerous degree of complacency," assuming that an unbalanced world economy could continue without correction.

Asian central banks have helped to keep things going so far by supporting the US economy much longer than could be expected, Roach said.

The American consumer - both "the weakest link" and the most important - has continued to drive the world economy by spending, according to Roach.

Emerging economies

But the US real estate "bubble" is showing signs of slowing down, with the key indicator of home mortgage refinancing down 45% from peak levels a year ago.

More than 2000 participants from
89 countries will attend

Later in the day, attendees were to discuss the emergence of China and India as major players on the global stage, including the former's role in becoming a regional and international leader.

Also on tap was a candid discussion on the changing shift in jobs in the future.

With an estimated one billion workers from emerging economies joining the global labour market, it has created both disruptions and opportunities.

Iran, oil

Fifteen heads of state, top business leaders and celebrities such as U2 front man and debt-relief advocate Bono gathered in this exclusive Alpine resort this week to try to come up with ideas and ways of solving main issues facing the globe: Iran's nuclear programme, high oil prices, new business models, and the shifting balance of power in Asia.

Pervez Musharraf is among the
world leaders attending the forum

Angela Merkel, the German chancellor, and Pervez Musharraf, the Pakistan president, are among the world leaders attending this year, along with Kofi Annan, the UN secretary-general.

One of the top themes will be the emergence of China and India as true global powerhouses economically, politically and - to the concern of many - militarily.

Though the forum falls on the Chinese lunar new year, several officials from the country are making the visit to Davos, including Zeng Peiyan, the vice-premier.

More than 2340 participants from 89 countries are attending, including 735 who are either chairmen, chief executives or chief financial officers of their companies, the highest figure of corporate leaders ever, Forum officials said.

Role of sports

Debt-relief advocate Bono (R)
is on hand to share his views

A new theme this year will be the role of sports in promoting economic growth and fostering ties between countries.

Among those scheduled to attend to discuss sports are Joseph Blatter, the FIFA president; Jacques Rogge, president of the International Olympic Committee; and David Stern, commissioner of the US National Basketball Association.

This year Davos welcomes Bono; Brazilian literary superstar Paulo Coelho; musician Peter Gabriel; and actress Angelina Jolie, a goodwill ambassador for the United Nations.

Police, augmented by the Swiss military, have erected barricades and barbed wire around the Alpine city and have imposed a no-fly zone in the area.