Developed world economies are in a trap of slow growth and need more fiscal stimulus and less austerity to re-launch development, economist Nouriel Roubini said Friday, quoted by CNBC.
“We are in a worse situation than in 2008. This time, we are dealing with budgetary austerity and caution of the banks”, Roubini said at a forum held at Lake Como, near Milan.
Roubini, known for his pessimistic vision for the world economy, believes that there is a 60% probability that the recession is imminent.
Recent economic data showing a mixed picture
In the U.S., claims for unemployment benefits fell last week, but the labor market has stagnated in August and the unemployment rate remained at 9.1%.
Recent surveys indicate lower confidence in the economy of people and companies in developed countries.
Asked about the chances of world economies to avoid recession, Roubini said that the indicators are going in the wrong direction.
Economists believe that a third round of U.S. monetary relaxation measures may not have the expected effects, as new measures will be necessary for budgetary support in Europe and the United States.
Regarding Europe, Roubini is expecting for the power of the European Financial Stability Facility to expand or a new release of common bonds.
In his view, euro area governments should try to weaken the euro.
A strong euro worries some analysts, because of the impact on exports.
Roubini, known as “Dr. Doom”, has gained notoriety in recent years after warning in 2007 that a credit crunch will follow.