The man who predict the global recession much earlier in the USA, Nouriel Roubini has said that the global recession could be a long drawn one and could be here to stay till 2010 end. In the India Today conclave 2009,Roubini said “Governments are falling behind the curve,” at the . “This recession can end up becoming even worse.”
The situation can be improved by appropriate policies, including governments taking over insolvent banks, cleaning them up and re-selling them to private investors, he said. The Group of Seven and the Group of Twenty economies “must act together to get out of this mess,” Roubini said.
Roubini said the global economy may shrink 1 percent or grow 0.5 percent in 2009, before recovering to about a 1 percent growth in 2010, effectively extending the recession until the end of next year.
Emerging market economies, including China and India, will slow down sharply, he said, adding that “we are already seeing the beginnings of a hard landing.”
China’s economy may grow 5 percent “at best” in 2009 after expanding at an average 10 percent pace each year in the past decade, Roubini said, rejecting the theory that emerging markets are decoupled from the problems in industrialized countries.
“It’s becoming a vicious cycle between demand, supply and the financial system,” said Roubini, who served as an adviser to the U.S. treasury department from 2000 to 2001.
Consumers and companies are cutting spending to survive in the current recession, “making the contraction even more severe.” Even if there are banks with sound assets, they wouldn’t lend in an economic decline, he said.
“If you don’t take the right policy action, this U-shaped recession will turn into an L-shaped recession like in Japan in the 1990s,” the professor said.
The situation can be improved by appropriate policies, including governments taking over insolvent banks, cleaning them up and re-selling them to private investors, he said. The Group of Seven and the Group of Twenty economies “must act together to get out of this mess,” Roubini said.
Roubini said the global economy may shrink 1 percent or grow 0.5 percent in 2009, before recovering to about a 1 percent growth in 2010, effectively extending the recession until the end of next year.
Emerging market economies, including China and India, will slow down sharply, he said, adding that “we are already seeing the beginnings of a hard landing.”
China’s economy may grow 5 percent “at best” in 2009 after expanding at an average 10 percent pace each year in the past decade, Roubini said, rejecting the theory that emerging markets are decoupled from the problems in industrialized countries.
“It’s becoming a vicious cycle between demand, supply and the financial system,” said Roubini, who served as an adviser to the U.S. treasury department from 2000 to 2001.
Consumers and companies are cutting spending to survive in the current recession, “making the contraction even more severe.” Even if there are banks with sound assets, they wouldn’t lend in an economic decline, he said.
“If you don’t take the right policy action, this U-shaped recession will turn into an L-shaped recession like in Japan in the 1990s,” the professor said.
