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Fear of ‘catastrophic event’ holding back global recovery, Harper says

Canada's Prime Minister Stephen Harper speaks at the World Economic Forum in Gurgaon on the outskirts of New Delhi November 7, 2012. A trend toward greater protectionism was pushing the world toward a prolonged recession, Harper said on Wednesday, although he added an economic catastrophe could be averted.

HANDOUT/REUTERS

Stephen Harper offered a gloomy assessment of the world economy even as he used his fourth day of an Indian trade mission to plead for closer ties with the south Asian country.

The prime minister told a World Economic Forum audience in Gurgaon, just outside New Delhi, that he worries fear of a "catastrophic event" is restraining the global recovery and spurring increased protectionism.

"If I were to go back and look ahead I would say one of the things that most surprises me is that four years after this crisis, we're still in it to some degree," Mr. Harper told a moderator at the global business meeting.

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He said the U.S. governments debt and deficit problems are one thing but a bigger more potentially imminent concern for world leaders is the risk of another economic crash.

"I do believe is that what worries big actors in the global economy, is that there will be some kind of catastrophic event as happened in late 2008 that will send everything into a tail spin," Mr. Harper said.

He said he believes it's holding back economic growth.

"And the constant fear out of the United States or Europe or somewhere else, is restraining, I think it continues to restrain the global recovery."

He said it's casting a chill over business decisions.

"I keep seeing out there are all kinds of people and businesses, who want to make things happen, but they keep feeling that they've got to hold back because something strange or unexpected could happen."

He said it's exasperating.

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"That's my frustration that we can't get out of that overhang," the prime minister said.

He said he is see countries resorting to blocking foreign trade in order to shelter their economies "There's starting to be greater protectionism going forward. It's not an avalanche yet. It's not something to panic about," he said.

The prime minister warned his audience these restrictive trade policies will only extend this period of economic weakness.

"This is the one thing that could keep us, or throw us into a prolonged recession for a long period of time."

Mr. Harper, an economist by trade, said he believed the Great Depression of the early 20th century was longer than it would otherwise have been because of shuttered economies.

The Canadian prime minister is in the midst of a six-day India trip to rekindle free trade and investment talks with the south Asian country.

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About the Author
Parliamentary reporter

Steven Chase has covered federal politics in Ottawa for The Globe since mid-2001, arriving there a few months before 9/11. He previously worked in the paper's Vancouver and Calgary bureaus. Prior to that, he reported on Alberta politics for the Calgary Herald and the Calgary Sun, and on national issues for Alberta Report. More

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