Berlin - With the economic downturn rapidly gaining around the world, the global film business is bracing itself for what could be a tough year.

As a result, the Berlinale, which is the first big international film festival of the year, is shaping up to be a key test of the current state of the world movie business.

This is especially the case as Berlinale organizers have in recent years moved to take advantage of the festival's position ahead of the festivals in Cannes in May and Venice in September to build up the business side of the gathering in Berlin.

The Berlinale's drive to bolster its business side also follows the decision by the organizers of one of the world's top film trade shows, the American Film Market to shift the event from February to later in the year.

But despite signs of film studios around the world cutting back projects and credit for producers becoming harder to secure, Berlinale organizers remain confident about the prospects of the festival's parallel business operation, the European Film Market (EFM).

"We are very pleased that all exhibit stands in the EFM are completely booked," said EFM director Beki Probst. "Buyer and seller registrations from Europe are particularly stable at present," she said.

However, despite a strong box office year in many countries and a string of successful blockbusters, the credit crunch, turbulent financial markets and shrinking global growth have made movie company executives even more cautious about taking on new projects.

The result has been film makers and producers from Hollywood through to Bollywood complaining about cost-cutting and budget trimming which have also begun to slow the process of completing projects.

In addition, the gloomy economic climate means that consumers are more likely to try to seek out other less expensive forms of entertainment than movie going with the resulting impact on the box office around the world.

Already the big Hollywood studios have announced big layoffs as the downturn tightens its grip on the US economy. More jobs are expected to be lost in the coming months.

Now in its 59th year, the Berlinale which is one of the world's top three film festivals is seen by the international film industry as presenting both an opportunity to showcase new movies for the year ahead as well as stitching together new pan-European movie financing deals.

As a sign that business might not be too bad in the movie industry, the Berlinale has once again this year been forced to increase the number of venues for the EFM so as to meet the demand for exhibition space.

In addition to the gracious surroundings of one of Berlin's leading museums, the Martin Gropius Bau, the EFM will this year also be spread out across three floors of the nearby Marriott Hotel.

As of the end of last week, 407 film companies from 55 nations were expected to turn up for the EFM when it opens its doors next month with a total of 6,500 industry representatives expected to attend the festival, which is roughly the same as last year.

But while the number of companies is down on the 430 that attended the festival last year, another five nations - Indonesia, Kazakhstan, Malaysia, Jordan and the Arab world's powerhouse filmmaker Egypt are setting up stands at this year's Berlinale.

As a further sign of the growing importance of the Berlinale and the EFM on the global film industry's annual calendar, the market plans to hold screenings of about 700 films.

This is on top of the films that are to be shown as part of the 10-day festival's sections, including those movies that are in the race for the Berlinale's top honours, the Golden Bear. (dpa)