The world’s developed economies are trapped at the “stall speed” of low growth and need to have greater fiscal stimulus and less austerity to kick-start growth, leading economist Nouriel Roubini told CNBC Friday.
Speaking at the Ambrosetti Forum on the shores of Lake Como, near Milan, Roubini said in an interview: “We are in a worse situation than we were in 2008. This time around we have fiscal austerity and banks that are being cautious.”
Roubini, known for his bearish views on the world economy, thinks that there is a 60 percent chance of a second recession imminently. Economic data of recent weeks presents a mixed picture.
On Thursday, the US government announced that jobless claims dropped by 11,000 to 409,000 last week. Friday's employment report in the US is expected to show a gain of only 75,000 nonfarm jobs during August, with the unemployment rate steady at 9.1 percent.
Recent surveys point to slumping business and consumer confidence across the developed world.Asked if there was still a chance the developed economies could avoid recession, Roubini said: "That’s very optimistic if you look at the data."
"The hard economic data (which has come out recently) is all relevant to July while the soft data which has come out is for the future and that’s all moving in the wrong direction," he added.
He also believes that a third round of quantitative easing in the US may not have the desired long-term effects, and that further fiscal stimulus across Europe and the US will be needed.
Economy: We Are in 'Worse Situation' Than in 2008, Says Nouriel Roubini - CNBC