When last we checked in with the good Dr. Doom, Nouriel Roubini, he was seeing light at the end of the tunnel. But he was still dismissing the happy idea that recovery would begin in 2009.
Well, Dr. D still thinks that the recovery will be weaker than expected, but now he sees it beginning in Q4.
Maybe these green-shoot things aren’t a dream, after all. Or maybe this sucker’s rally has been so persuasive that even Roubini has been fooled. (Based on the debt overhang and housing market, Roubini’s argument that the recovery will be disappointing still seems persuasive).
Reuters*: SEOUL (Reuters) – Economist Nouriel Roubini on Wednesday said the end of the global recession is likely to occur at the end of the year rather than the middle, and that U.S. growth will remain below potential afterwards.
“We are not yet at the bottom of the U.S. and the global recession,” said Roubini. “The contraction is still occurring and the recession is going to be over more towards the end of the year rather than in the middle of the year.”
“There is still too much optimism that a recovery is just around the corner,” said Roubini, a professor at New York University’s Stern School of Business and chairman of RGE Monitor, an independent economic research firm.
Roubini, who is widely credited for predicting the current economic turmoil, was speaking at the Seoul Digital Forum.
“A more sober analysis suggests we’re closer to the bottom; there is light at the end of the tunnel, but it’s going to take a while longer, and the recovery is going to be weaker than otherwise expected.”
Once the recession ends, “U.S. economic growth is going to be below potential for at least two years,” he said, amid multiple imbalances in the housing sector and the financial system, and the rise of public debt.
Roubini said the outlook for Asia was more positive than for Europe, Japan and the United States, thanks to stronger fundamentals.
“The latest economic indicators from Korea … suggest there is the beginning of an economic recovery, and growth might be already positive in the second quarter.”
The downside risk, Roubini said, was if advanced countries did not recover fast enough and if China’s rate of growth started to slow again.
Roubini predicted China would post a 6 per cent growth rate this year, a “hard landing” considering it grew by 10 per cent for a decade.
A robust recovery in Korean, China and other countries in the region would depend upon relying less on external demand and export-led growth and relying more on domestic growth, he said.
(Reporting by Marie-France Han; editing by Chris Lewis)
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