International business leaders were cautiously confident as they left Davos yesterday after the most upbeat annual meeting of the World Economic Forum since the terrorist attacks of September 11th, 2001.
Mr John T Chambers, president and chief executive of Cisco Systems, said he shared a general feeling of optimism that the US-led global recovery was sustainable, at least in the medium-term. "It is a cautious optimism, not abnormal risk-taking," he said.
Although most good news at Davos came from the US and Japan, which has had a healthy increase in growth, there were signs of improvement in Europe too. Mr Chambers noted that the high-tech industry had seen a steady rise in Europe during the past year and German economics minister Mr Wolfgang Clement said his government's reforms were the first step in a major process of liberalising Europe's biggest economy.
"We hope this will bring Germany again into the role of a driving force in European growth in the medium term," he said.
ECB President Mr Jean-Claude Trichet said Europeans often underestimated the extent of structural reform the continent has already seen in recent years. He claimed the single currency itself was an important and ambitious structural reform and said Europe could benefit from an injection of American optimism.
"We are over-exaggerating our gloom," he said.
The end of the war in Iraq and signs of an improvement in transatlantic relations helped to lighten the mood in Davos, which appears to have recovered after a bout of self-doubt in recent years. The closing black tie ball was reinstated this year, although participants were discouraged from wearing ties during most of the forum in an effort to create an informal atmosphere.
Anti-capitalist demonstrators were kept more than 35 km away from Davos, although about 50 protesters staged a brief demonstration about 1 km from the conference centre on Saturday.
Despite the optimism, many participants voiced a gnawing anxiety that the enormous double deficit in the US could wreck the recovery. European policy makers warned of the danger that a rising euro could choke off growth in the euro-zone and some complained the ECB seemed too relaxed in the face of the exchange rate rise.
Nobel prize-winning economist Prof Joseph Stiglitz said both the EU and the US were being badly managed, with too much fiscal restraint in the EU and too little in the US.
"The ECB has been too slow in reducing interest rates. This is particularly important now given the exchange rate position," he said.
Among the most promising developments at Davos was a meeting of representatives from 20 countries aimed at restarting the Doha round of world trade talks. Almost everyone at Davos agreed a new trade agreement would boost the world economy and help to lift millions out of poverty in the developing world.
Poor countries want an end to EU and US export subsidies for farmers, a step Washington appears ready to consider but which remains politically impossible in Europe.
French Finance Minister Mr Francis Mer tried to explain the EU's reluctance to cut farm subsidies by suggesting that Europeans were all farmers at heart.
