Former Federal Reserve chairperson between 1987 and 2006, Dr Alan Greenspan, said on Tuesday that while recent central bank actions have reduced the probability of a severe recession, the global economy is in for a "very sluggish period" over the next year.

"A rebound is not in the immediate outlook," he added.

"At the moment the data suggests we (the US) are on the brink of a recession. I have said the probabilities are greater than 50:50. In retrospect we will look back and declare it a recession," he said.

"Whether it is definable as recession, I am not sure anyone knows, but clearly there is a very sluggish period ahead," he said.

Greenspan said the current environment is the most complex he has seen since World War Two, although he has noted some improvement since the recent central bank actions to alleviate the problems.

Number of adverse events ahead

"It will stretch the capabilities of our knowledge, and hopefully we will come out of it with as little damage as possible given the degree of stability the financial systems have exhibited (in the past, e.g. 9/11) and I think we will come out of it all right," he said, adding that there were, however, a number of adverse events ahead.

Of concern, Greenspan said there was no clear evidence that a long-term structural oil price high had been reached.

"I don't know where it is. We're a long way from a resolution of this. With a large component of speculative demand we are going to have a highly volatile oil price," noted Greenspan.

He cautioned that false dawns had been seen before, and that he was concerned about solvency rather than liquidity problems at the moment, suggesting risks are significant.

Greenspan said the key now was getting through the housing price decline in the US, as homes were the ultimate collateral behind residence-backed mortgages.

"We won't see closure for a good number of months and perhaps into next year, but we do seem to have eliminated the most difficult problems of liquidity," he concluded.

Greenspan was talking via a satellite feed at a Radio 702 investment event in Sandton, Johannesburg.

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