ET GBS 2023: Nouriel Roubini lists out problems faced by the global economy

"Today it is said, in advanced economies, in the energy markets, we have to worry about inflation being too high rather than too low,"Roubini said.

Nouriel Roubini, CEO, Roubini Macro Associates, LLC, Professor Emeritus (2021-present), Stern School of Business, New York University, took the stage at the Global Business Summit 2023 on Friday 17th of February, to discuss the global economic outlook. “I’m here to talk about what the global economic outlook is. Realistically, if you look around the world, we live in a world of unprecedented, unusual, unexpected, uncertainties – 4Us,” he said at the beginning of his speech at the Global Business Summit 2023.

Continuing his speech at the Global Business Summit 2023, he mentioned his book titled, “The Mega Threats: Ten Dangerous Trends That Imperil Our Future, And How to Survive Them,” wherein he addressed a number of monetary and financial threats that threaten our economic and financial future and also non-economic threats that correlate and connect with the economic ones.

“Even if you think about the economic threats, they vary in many ways from those we were facing a few years ago. For example, two years ago, in the most advanced economies, there was a worry about low inflation, if not deflation, and central banks had a hard time achieving growth and inflation of 2 percent. Inflation was persistently low. Today it is said, in advanced economies, in the energy markets, we have to worry about inflation being too high rather than too low. Inflation is significantly above the two percent target in advanced economies,” Roubini said in his address at the Global Business Summit.

“A couple of years ago, we were worrying about what people refer to as ‘cycle of stagnation,’ a situation where the excess savings and low aggregate demands led to a weak economic growth characterised by low inflation instead of deflation. Today we have to worry about an opposite phenomenon, ‘stagflation’ – a situation where you have inflation and potential recession at the same time in advanced economies because of a number of aggregate negative supply shorts that are eating economic growth while raising the cost of production,” he continued.

“A couple of years ago, people were worried about interest rates being too low. About 18 trillion dollars equivalent of public debt in Europe and Japan had negative nominal interest rates up to maturities of 10 years. Today, the problem is opposite. Because of the rise in inflation, central banks are increasing policy rates. Long-term interest rates are going higher. But these high interest rates in a world where there is too much debt, private debt and public debt has gone up from 100% of GDP in the 70s to 350% GDP last year globally. This is why interest rates create the risk of debt crises in the private and public sector in where the debt ratios are high,” Roubini said at the Global Business Summit.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of ET Edge Insights, its management, or its members

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