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Manufacturing activity is contracting across Europe and most of Asia, data showed on Thursday, and a Chinese official declared that the world economy faces a worse situation than in 2008 when Lehman Brothers collapsed.
Factory activity shrank even further in the euro zone, reinforcing the view that the debt-strapped region is in recession, while British manufacturing contracted at the fastest pace in two years, raising the risk the UK economy may suffer the same fate.
This has been the case for much of the developed world for several months, with the exception of pockets of better news from the United States. But the slowdown now appears to be spreading to economic powerhouses of the developing world.
China's official purchasing managers' index (PMI) showed factory activity shrank in November for the first time in nearly three years, while a similar PMI showed Indian factory growth slowed close to stall speed.
Both China and Brazil eased monetary policy on Wednesday. It came alongside coordinated action from the world's biggest central banks to try to prevent another credit crunch by lowering the cost of dollar swaplines.
"The big picture here is this is an unwinding of a 20-year debt bubble," said Peter Dixon, global financial economist at Commerzbank. "It's going to be painful, and it's going to be nasty. What policymakers are aiming for is a smoothing of the path."
But those policymakers appear to be getting more worried.
Zhu Guangyao, China's advance coordinator to the Group of 20 talks and also a vice finance minister, said heavily indebted countries had limited scope to act now, which will make it harder to sustain global growth as the European debt saga drags on.
"The current crisis, to some extent, is more serious and challenging than the international financial crisis following the fall of Lehman Brothers," Zhu said.
"It's keenly important for countries around the world to work together in the sprit of 'co-operating in the same boat'," he added.
After the Lehman bankruptcy, G20 countries committed trillions of dollars to boosting growth and backstopping banks, and central banks cut interest rates to record lows.
But rates are still near zero in the United States, Japan and Britain, and public finances have deteriorated around the world, leaving less policy space to counter a European downdraft.
Fast-growing emerging markets such as China, Brazil and India led the recovery in 2009, and they are still growing far more rapidly than most developed economies. But they are not immune to weak demand from Europe or the United States.
China's official purchasing managers' index for November fell to 49, dipping below the 50 mark that separates growth from contraction for the first time in nearly three years.
The index of new export orders tumbled to the lowest level since February 2009, perhaps not surprisingly given that Europe is one of China's biggest trading partners.
The final euro zone manufacturing PMI was confirmed at 46.4, its weakest level in two years, with factory activity in both of its biggest economies, Germany and France, weakening.
The UK factory PMI fell to 47.6 in November, its lowest since June 2009, further evidence that Britain's economy is in dangerous territory.
"The manufacturing engine has run out of steam," said Rob Dobson, senior economist at Markit, which compiles the surveys.
Similar factory data for the U.S. are expected later on Thursday, coming on the heels of a Federal Reserve report on Wednesday that said there was moderate growth in recent weeks but that hiring and housing market activity remained anemic.
The weaker-than-expected China PMI reading came one day after Beijing lowered banks' reserve requirements by 50 basis points to try to ease credit strains.
"It's time to start reflating China's economy," said Qu Hongbin, co-head of Asian economics research at HSBC.
An HSBC PMI on China also showed manufacturing activity shrank in November as new orders fell. The index dropped to 47.7 from 51 in October.
He predicted China's central bank would cut another 1.5 percentage points off of reserve requirements by mid-2012, and said the European debt crisis along with China's weakening property market would "only add to downside pressure on growth."
Reserve requirements for big banks stand at 21 percent.
Just a few months ago, inflation was the primary concern for most of Asia's economies. But Europe is the top export destination for many countries including China, so when its crisis intensified, Asia's growth prospects dimmed.
South Korea's factory activity shrank for a fourth consecutive month. Its November exports rose faster than expected, although many economists think that won't last because export orders weakened.
In Indonesia, year-on-year export growth slowed in October to 16.7 percent, well below economists' forecast for 22.7 percent and barely one-third of the growth rate recorded in September.
India bucked the trend, reporting a pick-up in export orders, although its overall PMI dipped on weak domestic demand.