Many of the 1,000 business leaders who attended the World Economic Forum left the picturesque Swiss town of Davos yesterday after one of the most depressing weekends they could remember. The mood was one of almost unremitting gloom, allied with fear of the consequences of an imminent war against Iraq.

Most participants from the US were certain that President Bush would attack Iraq within the next eight weeks. Corporate America will support the president if he goes to war but there are no illusions in US boardrooms about the economic damage war could cause.

Experts at the Washington-based Centre for Strategic and International Studies have identified four scenarios: no war, leaving Saddam Hussein in power; a short, successful campaign, lasting between four and six weeks; a difficult war, lasting up to three months; and a nightmare scenario involving a prolonged war accompanied by terrorist attacks on the West.

Most believe that leaving Saddam in power would serve to prolong the uncertainty that is afflicting markets and would keep growth sluggish. A short, successful war could provide a very slight fillip to the world economy but the effect on US growth would be only 0.1 per cent in 2003 and would be negligible in the euro zone.

A slightly longer war, particularly if it involved the destruction of Iraqi and Saudi oil fields, would drive oil prices to record levels and could tip the US towards recession.

The nightmare scenario, which most observers regard as the most unlikely, would plunge both the US and Europe into recession before the end of this year.

Leading figures in the oil industry privately dismiss suggestions that the US is seeking to grab Iraq's oil reserves after a successful war. They say that any western companies attempting to develop Iraqi oil fields would have no option but to work in partnership with the Iraqi state oil company because only the Iraqis have the necessary knowledge of the fields.

Russia is likely to retain contracts it already has in Iraq and other contracts are likely to be put out to tender, a process that is unlikely to leave everything in US hands.

Oil executives acknowledge that the US - and the West in general - has an interest in removing the danger that Saddam could attempt to blockade exit routes for oil tankers from the Gulf. Few, however, believe that this threat is enough on its own to justify a war on economic grounds.

Turkey's new government was represented in strength at Davos and it is believed to have received promises from the US of billions of dollars to compensate for any economic damage war could bring to Turkey.

After the last Gulf War, tens of thousands of Kurdish refugees from Iraq helped to radicalise Turkey's Kurdish community. A terrorist campaign by the Kurdish PKK cost thousands of lives and was met with appalling repression from the Turkish authorities. It also helped to wreck Turkey's economy.

Even without the threat of war, the elite at Davos had little to cheer about and many participants described this year's meeting as the most dismal they could remember. Some economists suggested the world was already experiencing deflation in the sense that it is increasingly difficult to achieve low real rates of interest.

As they left the Alpine slopes to return to the bleak reality of the boardroom, many business leaders were praying for a miracle that would remove Saddam from power without a war. But even as they hoped for the best, most felt sure the worst was yet to come and were already bracing themselves for the grim months ahead.