There is a one in three chance a “perfect storm’’ of fiscal woe in the United States, a slowdown in China, European debt restructuring, and stagnation in Japan will converge to stunt global economic growth beginning in 2013, New York University professor Nouriel Roubini says.
Other possible scenarios are “anemic but OK’’ growth or an “optimistic’’ scenario in which the economy expands.
Stocks worldwide have lost more than $3.3 trillion since the beginning of May, and Roubini said financial markets by mid-2012 could start worrying about a convergence of risks.
The MSCI AC World Index has tumbled 4.7 percent this month on concern that recent data, including an increase in the US unemployment rate to 9.1 percent in May, signal the global economy is losing steam.
Economic expansion may slow this year as “the deleveraging process continues,’’ fiscal stimulus is withdrawn, and confidence ebbs, Roubini said.
He is among analysts who predicted the 2007-2009 financial crisis. It was the worst such episode since the 1930s, triggered by the collapse of US mortgage securities.
Some of his predictions have not panned out, though, including his call on July 4, 2010, for “market surprises on the downside’’ in ensuing months.
Roubini said a failure to address the US budget deficit risks a bond-market “revolt.’’
“We’re still running over a trillion-dollar budget deficit this year, next year, and most likely in 2013,’’ he said in a speech in Singapore on Saturday. “The risk is at some point, the bond market vigilantes are going to wake up in the US, like they did in Europe, pushing interest rates higher and crowding out the recovery.’’
Japan’s economy, the world’s third-largest, slid into a recession last quarter after the March 11 earthquake and tsunami and ensuing nuclear crisis. China’s economy may face a “hard landing’’ after 2013 as government efforts to boost growth through investment cause excess capacity, Roubini told reporters.
A record $2.7 trillion of loans were extended in China over two years, pushing property prices to record highs even as authorities set price ceilings, demanded higher deposits, and limited purchases of second homes.
Other possible scenarios are “anemic but OK’’ growth or an “optimistic’’ scenario in which the economy expands.
Stocks worldwide have lost more than $3.3 trillion since the beginning of May, and Roubini said financial markets by mid-2012 could start worrying about a convergence of risks.
The MSCI AC World Index has tumbled 4.7 percent this month on concern that recent data, including an increase in the US unemployment rate to 9.1 percent in May, signal the global economy is losing steam.
Economic expansion may slow this year as “the deleveraging process continues,’’ fiscal stimulus is withdrawn, and confidence ebbs, Roubini said.
He is among analysts who predicted the 2007-2009 financial crisis. It was the worst such episode since the 1930s, triggered by the collapse of US mortgage securities.
Some of his predictions have not panned out, though, including his call on July 4, 2010, for “market surprises on the downside’’ in ensuing months.
Roubini said a failure to address the US budget deficit risks a bond-market “revolt.’’
Japan’s economy, the world’s third-largest, slid into a recession last quarter after the March 11 earthquake and tsunami and ensuing nuclear crisis. China’s economy may face a “hard landing’’ after 2013 as government efforts to boost growth through investment cause excess capacity, Roubini told reporters.
A record $2.7 trillion of loans were extended in China over two years, pushing property prices to record highs even as authorities set price ceilings, demanded higher deposits, and limited purchases of second homes.
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