Experts downbeat on global economy

CERNOBBIO, Italy: Business leaders and finance experts gathered here have offered a downbeat assessment of the global economy, with several predicting another recession due to a calamitous cocktail 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,” New York University economist Nouriel Roubini said on Friday 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 revelled in the boom times.

Much of the concern focused on the United States.

“The numbers that we've seen recently for the United States on manufacturing, on construction, on consumers' sentiment tell me that the odds have gotten much greater that the United States 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 economics professor Martin Feldstein, a member of 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 that advanced economies had reached a stall speed of around 1% annual growth, a figure that is lower than official expectations in many countries.

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