Obstfeld said both the U.S. and Europe faced a backlash at home against international economic integration — as seen in the rise of euroskeptic parties in the European Union (EU) and the isolationist policies of some U.S. presidential candidates . This trend threatened to halt or reverse 70 years of increasingly open trade, he warned.
The EU's open borders between member countries were also under threat, Obstfeld added, due to both economic pressures and the influx of refugees from the Middle East.
"Continuing violent instability in a number of countries, notably Syria, continues to crater their economies, driving millions of refugees to surrounding countries as well as to Europe. This is a humanitarian disaster," the economist said at the conference.
"It has challenged the European Union's capacity to preserve open internal borders and as the incidence of terrorism has increased, the strains have only grown. Coupled with other, economic, pressures, the result in Europe has been a rising tide of inward-looking nationalism."
He said one manifestation of this was the possibility the U.K. might vote to leave the EU in the referendum the country is holding in June 23. This would damage a wide range of trade and investment relations, Obstfeld said.