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A downbeat view of the global economy

CERNOBBIO (Italy) - Business leaders and finance experts gathered in Italy offered a downbeat assessment of the global economy on Friday — with several predicting another recession due to a calamitous mix of sluggish growth, eurozone dysfunction, and financial market volatility.

The year’s events — from natural disasters and violent uprisings to fears of debt defaults — have not only sent shock waves through the financial world but also caused a slump in confidence among consumers and industry.

“There is a significant probability of a double-dip recession,” pronounced New York University economist Nouriel Roubini, in opening remarks that lived up to his nickname of “Dr Doom” — earned for forecasting a financial crisis years before the 2008 crash, even as many reveled in the boom times.

On this occasion, he seemed to reflect prevailing sentiment at the annual Ambrosetti Forum on the shores of an overcast Lake Como — although some felt that at least the emerging economies and a few countries in northern Europe would do fine.

Much of the concern focused on the United States.

“The numbers that we’ve seen recently for the US on manufacturing, on construction, on consumers’ sentiment tell me that the odds have gotten much greater that the US is going to continue to decline and that we are going to be in a formal recession before the end of the year,” Harvard University economic professor Martin Feldstein, a member of the President Barack Obama’s Economic Recovery Advisory Board, told the Associated Press.

Roubini blamed the mostly unexpected events of 2011 — the Arab Spring fuelling oil prices, the turmoil in Greece spreading through Europe, the Japanese natural disasters upsetting global supply chains and “significant worries about the US system and the political fight [over the debt ceiling] between the Democrats and the Republicans.”

Because of this series of shocks, he estimated advanced economies had reached a stall speed of around one percent annual growth, a figure that is lower than official expectations in many countries.

Roubini said that governments and central banks, which have already made multitrillion-dollar stimulus moves, had no more “bullets.”

“The market is forecasting two years of recession,” said Italian economy analyst Gianluca Garbi.