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Recession to end in ’09; see weak recovery: Nouriel Roubini

This article was posted on Jul 21, 2009 and is filed under Press Releases

The recession facing the global economy would last 24 months and — after having started in December 2007 — would be over by the end of this year, Nouriel Roubini, Chairman, RGEMonitor.com, said. In an interview to CNBC, Roubini, recognized as one of the few people who foresaw the financial crisis beforehand, added that the recovery would be weak.

‘Won’t test March lows’

Roubini also spoke on the equity markets and said global indices may not re-test their March lows. “The March lows were pricing in a near depression and the collapse of the financials system but within the current levels and lows of the March, there is a meaningful risk of a correction if the economy is going to surprise on the downside as expected.”

US at crossroads

The US was facing a catch-22 when it came to exiting from the relaxed monetary and fiscal policy it adopted to counter the crisis, Roubini said. “It’s a very delicate trade-off,” he said. “If you do it too much and too soon: raising taxes and cut spending, you end up in a recession because the economy is still very weak. If you instead wait and you have a large budget deficit, eventually that is going to push higher interest rates, and by the end of the next year, it could lead to increase in expected inflation. If that were to happen, long rates go up and you crowd out recovery again.”

source: Moneycontrol

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