Negotiations between G20 leaders tackling the European debt crisis may not be enough to stave off the potentially-ruinous effects of the eurozone's sovereign debt debacle, a financial policy watcher says.
Ian Lee, a management professor at Carleton University, said another recession may be unavoidable despite Europe's debt problems.
The International Monetary Fund, he noted, recently issued a downgraded economic outlook for Canada, the United States and Europe through to 2012.
"I'm skeptical (of recovery) because if you look at the latest growth forecast, they have been ratcheted down very dramatically," Lee told Â鶹´«Ã½ Channel on Saturday.
The international lending group issued its gloomy growth predictions last Tuesday, warning that the global economy is entering "a new dangerous phase." In the same report, the IMF slashed Canada's growth forecast to 2.1 per cent this year and 1.9 per cent the next.
Speaking to a radio host on Saturday, Bank of Canada Governor Mark Carney said Canada is well-equipped to battle another recession should one arise.
In a separate interview, Carney referred to the European debt crisis as manageable but only if Europe finds the "political will" to deal with it.
Anxiety in Europe
Though financial jitters have been felt worldwide, Lee said European countries are shouldering the bulk of the worry.
"Right now Europe is basically flat-lining, meaning there's no growth coming out of Europe," he said. "I just can't see them turning around and revving up again."
Finance officials are hastily working to solve a sovereign debt crisis in Europe which may be felt on the global stage. The IMF is currently providing bailout support to Greece, Portugal and Ireland, three heavily-indebted countries.
Experts fear that if these countries don't make the necessary debt payments, global financial growth will slow to a halt.
"I think we're probably going into a recession in Europe, nonetheless. All the indicators are pointing in that direction," said Lee who has done consulting work for the World Bank and the Canadian International Development Agency (CIDA).
But before world leaders begin discussing a potential recession, Lee says the most immediate question is whether Europe can avoid a financial meltdown.
"If they proceed to an orderly default with Greece…that will alleviate a tremendous amount of pressure," said Lee.
He adds that a Greek default will set a precedent for Portugal and Ireland.
"Of course, the focus has been on these three countries because they're in really unsustainable positions," he said. "Whether this will prevent a recession is really the very big question."
With files from The Canadian Press and The Associated Press
