Nouriel Roubini, co-founder and chairman of Roubini Global Economics, said the economy has 60% chance of falling into a recession next year.
“We’re not going to have a fiscal stimulus,” Roubini told Bloomberg Television. “We’re going to have a fiscal drag and therefore the short-term effect of a rally in the market is going to fizzle out when the real economy is going to go and tank. We’re entering a recession based on my numbers.”
Separately, Bloomberg quotes Roubini from an interview with the Rome-based newspaper La Repubblica, in which he says he doesn’t expect the austerity plan passed by the government to enable Italy to meet the goal of a balanced budget in 2013.
“Italy has to raise its growth potential through structural reforms to correct the public finances and it thus needs political stability and strong consensus,” the paper cited Roubini as saying.
The country needs annual growth of 1.2%, a primary surplus of 4.5% of its gross domestic product and borrowing costs below 7%, he said, according to La Repubblica.
Roubini made headlines earlier in August when he released commentary titled, “Is Capitalism Doomed?” a commentary decrying the world’s broken economic models.
Roubini chronicles the economic problems that have brought the world to the brink of a double-dip recession in his article published on Project Syndicate, where he notes that the advanced economies are idling as the fast-growing emerging markets are experiencing sharp slowdowns. And he laments that monetary authorities lack the tools to bring about recovery while fiscal policies are acting as a drag on economic growth.
Citing global demonstrations fueled by “growing inequality, poverty, unemployment and hopelessness,” Roubini writes: “So Karl Marx, it seems, was partly right in arguing that globalization, financial intermediation run amok, and redistribution of income and wealth from labor to capital could lead capitalism to self-destruct (though his view that socialism would be better has proven wrong).”