CERNOBBIO, Italy — Business leaders and finance experts gathered in Italy offered a downbeat assessment of the global economy Friday — 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," 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 Roubini 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 U.S. on manufacturing, on construction, on consumers' sentiment tell me that the odds have gotten much greater that the U.S. 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 fueling oil prices, the turmoil in Greece spreading through Europe, the Japanese natural disasters upsetting global supply chains and "significant worries about the U.S. 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 1 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 gathering opened amid growing concerns over a slowdown in manufacturing — the main pillar of growth in developed economies in the years since the global financial crisis — and about European banks' exposure to sovereign debt.
Global stock markets slumped Friday ahead of the release of U.S. employment figures, with investors worried that a low number could reignite fears of a recession in the world's largest economy.
"The market is forecasting two years of recession," said Italian economy analyst Gianluca Garbi.
University of Munich economics professor Hans-Werner Sinn also concurred that economic contraction in much of the rich world was a real danger.
Sinn noted that Europe was now firmly on a two-tier track, with Germany and other northern countries doing reasonably well while the south struggled with high unemployment, low growth and crushing debt. He predicted a partial breakup of the euro, with at least Greece finding its way out of the currency union.
"You've become too expensive," he told a roomful of glum-faced Italians. He noted that a common currency and monetary policy — controlled from faraway Frankfurt — has made it impossible for slower economies on the southern rim to grow their way out of debt through inflation or stimulate exports through devaluation.
"There has to be a real restructuring in Europe, as painful as it is, (and) for some this is too much — for Greece it will be too much," Sinn said. "I don't see any possibility for a fruitful solution for Greece in the euro. It's a pain if they stay in, it lasts a decade or more."
Roubini warned that "if you had a breakup of the monetary union with some of the member states exiting, the consequences will be global and systemic."
Session chairman Jacob Frenkel, a former governor of the Bank of Israel who today is chairman of JP Morgan Chase International, said the global economy was torn between the post-2008 stimulus efforts and fears that governments were overextending themselves by building up debt.
Min Zhu, a former top Chinese official who in July became deputy director of the International Monetary Fund, offered an outlying glimmer of optimism by suggesting that the negativity ignored the increasingly crucial role of emerging markets like his native country. He predicted emerging markets would still grow at around 6 percent and said it was unlikely even the rich world would see two consecutive quarters of contraction.
"This is not a recession," he said.
Furthermore, Min said, the emerging world was now accounting, for the first time, for about half the world's output under purchasing price parity — which factors in the fact that the same amount of money buys more and therefore means more in developing nations. Since the emerging world also accounts for the majority of global growth, the picture was better than might appear, he argued.
Roubini countered that a rich-world recession would drive down demand regardless.
"The slack in the goods markets, the slack in the labor markets, and the slack in the housing and real estate markets is going to become worse, and if that recession were to occur you would have a collapse in the demand for commodities in spite of the strong role of emerging markets," Roubini said.
Frenkel, a former governor of the Bank of Israel, invoked the famous maxim that "a pessimist is an optimist with experience."
"I guess my colleagues have a lot of experience," he said.