Deutsche Bank CEO Christian Sewing said central banks like the European Central Bank and US Federal Reserve “have used their tools to a large extent already” to avoid global economic risks. He said they have “no conventional measures left to effectively cushion” the hit of a “real economic crisis”.
Mr Sewing said the world is facing an “extraordinary macroeconomic situation that is very hard and difficult to predict, and potentially making this whole thing even more volatile”.
He added: “I’m particularly worried about a series of financial and geopolitical risks, ranging from the situation in Hong Kong to tension in the Middle East,”
His warning comes after EU member states were warned the Eurozone is headed for a “fresh crisis”, bigger than the 2011-2012 disaster.
Economist Liam Halligan said Europe’s largest economy Germany was the only country to save the monetary union from collapse.
But Germany is on the brink of a recession and its economy was recently brought to its knees, shrinking by 0.1 percent in the second quarter.
But Mr Halligan urged German Chancellor Angela Merkel to make significant changes to fiscal policy to stimulate its own economy and the broader region.
READ MORE: EU crisis: Eurozone to ‘collapse’ amid huge trade declines
“Future developments will hinge on how long the present economic dichotomy lasts and which direction it takes one it dissolves.
“As things currently stand, it is unclear whether exports and, by extension, the industry will regain its footing before the domestic economy becomes more severely affected.”
The Bundesbank blamed Brexit and the escalating trade war between the US and China for a drop in orders for cars and industrial equipment that has helped Germany’s economy previously flourish and maintain its place as the European powerhouse.
But the downturn in the second quarter of the year is likely to continue in the third quarter leaving the economy on the brink of a technical recession, two consecutive quarters of negative Gross Domestic Product growth.
Exports “were down substantially” as Brexit preparation plans ahead of the UK’s initial March exit date meant companies stocked up their inventories in the first quarter.
Analysts at Deutsche Bank have even downgraded figures could face further downward revisions.
They said recently: “Given the increasingly fragile state of the global economy, the realisation of one or more risks could easily push the economy into a completely different scenario.”
Meanwhile, inflation across the Eurozone has continued to fall, according to recent figures.
Eurostat, the European Union’s statistics agency, revised down its figure for eurozone inflation in July.
Its initial forecast of 1.1 percent was revised to one percent – below the previous month’s inflation of 1.3 percent and even lower than the ECB’s target of close to two percent.