Roubini Says Bottom Of U.S. Recession Not Here Yet By REUTERS Published: May 27, 2009
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 percent growth rate this year, a "hard landing" considering it grew by 10 percent 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.
