Sept. 30 (Bloomberg) -- Deutsche Bank AG Chief Executive Officer Josef Ackermann said the delay in solving Europe’s sovereign-debt crisis may push the global economy into another economic slump.
Recent sentiment indicators suggest “that the global economy is on the brink of a recession,” Ackermann said in a speech in Zurich today. “At the heart of the turmoil lies uncertainty about the management of sovereign-debt problems.”
Concern that European officials will fail to contain the region’s debt crisis and the U.S. recovery is faltering has wiped more than $9 trillion from the value of global stocks this quarter. Policy makers will again weigh how to intensify efforts to stem the turmoil and avert a Greek default at an Oct. 17-18 summit in Brussels.
Ackermann also said policy makers need to prevent Greece’s debt crisis from sparking regional contagion.
“At the very end, we will probably have some sort of restructuring of the Greek debt,” he said.
While Portugal’s and Ireland’s efforts are “quite reassuring” and Spanish measures are “positive,” Ackermann said that Italy “is the big problem” and “has to do more.”
German Chancellor Angela Merkel will host European Central Bank President Jean-Claude Trichet and International Monetary Fund chief Christine Lagarde in Berlin on Oct. 6. The talks precede an Oct. 14-15 meeting of Group of 20 finance ministers in Paris and the European Union leaders’ summit.
Fourteen of the 17 euro countries have ratified the upgrade of the region’s temporary rescue fund, the European Financial Stability Facility. A permanent fund is now at the start of a ratification process that requires all 27 EU governments to endorse an amendment to the bloc’s governing treaties.
Europe’s recovery is showing increasing signs of a slowdown, with confidence in the economic outlook dropping in September and manufacturing and services industries shrinking for the first time in more than two years.
About three-quarters of global investors surveyed by Bloomberg this week anticipate the euro region will fall into a recession during the next 12 months, with more than a third predicting the European debt crisis will derail the world economy in that period.
--Editors: Fergal O’Brien, Andrew Atkinson
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