Mr Soros also said Europe would suffer a far less pronounced cyclical downturn than the US as stock market investments in Europe were not as high and tax cuts and structural reform were helping the economy. The Hungarian-born billionaire, speaking at the World Economic Forum business summit in Davos, said he was concerned about how the global financial system, and in particular Asia, would weather the downturn.

Asked about whether he thought the US was already in recession and what the likely impact on the world would be, MrSoros said: "Most likely we are in a recession right now." He said he was concerned about the global system because it was weakened by the 1997 financial crisis "and hasn't really recovered from it."

"Obviously the Japanese financial system is sick and in spite of all its efforts hasn't worked its way out of the trouble, in fact perhaps it seems to be regressing again. I don't have a prescription, they may appreciate that because they have received too many prescriptions from Washington."

Turning to US monetary policy, Mr Soros said the Fed was "determined to do whatever is necessary" to counter the downturn. The Fed was more likely to ``overshoot than undershoot'' in lowering interest rates but noted that there was no particular equilibirum for interest rate levels and that the Fed had "a great deal of freedom to move."

The Fed is widely expected to lower interest rates by half a point at its next meeting on Tuesday and Wednesday. It cut rates by half a point on January 3, lowering its Fed funds rate on overnight lending to 6.0 per cent.