Monday, August 17, 2009

Anaemic Rather than Robust Recovery in Advanced Economies

That’s what Nouriel Roubini sees for the near future. Read his analysis here .

The bottom of the recession is quite close but it has not yet been reached. Households need to deleverage and save more, the financial system is severely damaged , the corporate sector faces a glut of capacity and deflationary pressures still persist, while the public sector’s debt accumulation risks crowding out a recovery in private sector spending.

A double-dip is not to be excluded and growth is likely to be below trend for “at least a couple of years”. As to the recent market rallies in stocks, commodities and credit, they may have gotten ahead of the improvement in the real economy. “If so, a correction cannot be too far behind.”

Sounds reasonable.

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