That was the stark message from Nigel Webber, chief investment officer of HSBC Private Bank, to investors gathered at an investment breakfast seminar at HSBC’s Harbourview building in Hamilton yesterday.Mr Webber stressed that by recession, he was not referring to the widely used definition of a recession, that is two consecutive quarters of negative economic growth. Instead, he meant a period of negative aggregate economic activity.“At best we are looking at flat line growth,” Mr Webber said. “The probability of recession is growing all the time and I would say it’s now probably more than 50 percent.“The leading indicators say we are heading down rather than up.”The fall in economic activity would result in more companies missing earnings estimates and that in turn would lead to falling equity prices. Mr Webber said this meant investors should have a “great opportunity” to acquire high-quality stocks at historically low prices within the next few months.As the backdrop for his economic outlook for the coming three quarters, Mr Webber outlined another three major themes. They were falling inflationary pressures, a likelihood of no interest rate rises in developed economies over the next year, and a widespread desire of governments to devalue their currencies to try to make themselves more competitive.The sovereign debt crisis in Europe is uppermost in many investors’ minds. Mr Webber said the fundamental problem in the Eurozone was that differential in growth and productivity between the southern and northern countries, an issue where there seemed no political appetite to tackle.In an interview, Mr Webber added: “If the European Central Bank were to formerly become the lender of last resort, it would not solve the crisis, but it would go a long way toward stopping it from spreading.“As the lender of last resort, the ECB would be in a position to buy the bonds of Greece, Italy, Portugal and Spain. That is the one thing they could do immediately to stem the crisis.”In doing this, the ECB would effectively be printing money. What was preventing this from happening was the opposition of Germany, which was still haunted by its own history of hyperinflation in the 1920s and 1930s, he added.He expected that emerging markets would also see a significant drop-off in growth, but he felt that with their growing populations and increasing appetite for consumer goods, they would continue to grow and play a key role in global economic recovery.Mr Webber felt that in the US, sentiment played a major part in the direction of the economy.“There is a significant correlation between confidence to invest and confidence to spend money,” Mr Webber said. “The US needs consumers to spend more and businesses to spend more, but both are putting their chequebooks away.”He said politicians had in large part created the prevailing lack of confidence in their inability to agree on measures to help the economy.Mr Webber said he was often asked whether it was too late to buy gold, given that its price has roughly tripled over the past five years.Good reasons why it was not too late, he said, were the fact that central banks in emerging markets were net buyers of gold, exchange-traded funds (ETFs) had made it easier for investors to buy gold and had helped to stimulate demand, and that the demand for gold jewellery was rising, especially in China and India. Meanwhile gold production was falling. So the rules of supply and demand would suggest that the price of gold would continue to rise, he said.For patient investors with a long-term approach, great buying opportunities are not far away. “What we are seeing is that the prices of equities are down to historic lows,” Mr Webber said. “We are assuming the economic activity will recover, as it should.“Then there will be a great opportunity to go back into riskier assets like equities, commodities and real estate over the next 12 months. The message is to stay defensive for the time being, stay in things like bonds and gold, until such time as growth and the political situation starts to improve.”