Economist and NYU professor Nouriel Roubini gave an interview with Bloomberg in Turkey to discuss the fiscal cliff and his global economic outlook.He has a particularly bleak global outlook and, although it is not his most likely scenario, believes there is a chance that an economic perfect storm might devastate the global economy in 2013:
The perfect storm is not my baseline scenario. My baseline scenario is one of low economic growth in advanced economies and recession in some of them, like the euro zone, like the U.K., like Japan but not recession in the U.S., slower economic growth in emerging markets; that’s the baseline.
But there could be a situation in which you could have a perfect storm that would happen if there is a fiscal cliff in the United States that tips the US into a recession, if the euro zone crisis gets worse and there is an exit of Greece that is disorderly, if the landing of China becomes a hard landing of China, and four, if we really had a war in the Middle East between Israel and Iran and oil prices go to $200/barrel.
Roubini is most concerned about conditions in the euro zone. He says that the latest data indicates that the E.U. has gone into a double-dip recession, and projects that nations on the periphery of the E.U. (Italy, Spain, Cyprus, etc.) will remain in recession throughout 2013 and beyond.
Roubini cites an overvalued euro, front-loaded fiscal austerity, a credit crunch by banks, and low levels of business and consumer confidence as the reasons for his pessimism. He does, however, see a “ray of hope” in the sense that Europeans are realising the severity of their problems and are moving more aggressively to address them.
See the whole interview below:
Business Insider Emails & Alerts
Site highlights each day to your inbox.