There was still no conclusive evidence that the global economy was slipping into recession, Goldman Sachs chairman Mr Peter Sutherland said yesterday.

Before the annual trade seminar of the Department of Foreign Affairs, Mr Sutherland said he was not pessimistic about the medium-term outlook for the global economy.

"We have a situation at the moment where unemployment is extremely low in the US, inflation is under control both in Europe and the US and, while there are a number of significantly worrying aspects in the global economy, the basic economy doesn't provide the basis for a conclusion that we're moving into a global recession. I don't believe that there should be a global recession," he said.

Confidence, particularly in the equity markets, was crucial, he said. "The consistent reduction of interest rates in the US, which may not be complete, has a lagged effect. When interest rates are dropped over a sustained period of time, it has been historically proven that the positive dynamic that that should give doesn't kick in for six to nine months and sometimes a year. I still believe that the effects of the interest rate reductions in the US will be basically positive," he said.

While the recent spate of job cuts could have a negative impact on consumer confidence, evidence to date suggests consumer confidence in the US was still high, Mr Sutherland said.

"It hasn't fallen as one might have expected. Obviously because so many US citizens are shareholders and the stock markets have taken a hammering, this ultimately could be expected to have a negative effect. But equally the reduction in interest rates should continue to sustain an interest in buying stocks and maintaining an interest in shares," he said.

Addressing the seminar, the Tanaiste, Ms Harney, said the Irish economy was performing extremely well despite the global downturn. "The more excitable commentators seem to think that if the growth rate drops from 10 per cent to 7 per cent, that is a cause for concern. The Irish economy is still growing at twice the EU average and what is happening now is more sustainable," she said.