Top economist warns of decade of depression and debt due to pandemic

Professor Nouriel Roubini has warned of depression and debt. Source: Getty Images
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Daily US Times: The coronavirus pandemic could lead the world to decade of depression and debt, economist Nouriel Roubini has warned.

Professor Roubini, who is nicknamed Dr Doom for his gloomy predictions, said there are some jobs that simply will not come back after this crisis.

He said even if the global economy recovers this year from the impact of the coronavirus, it will be “anaemic”.

Professor Roubini foresaw the financial crisis in 2008 before many others. He has now warned of “unprecedented” recession.

While talking with BBC’s Talking Asia programme from his home in New York, he said: “During the global financial crisis it took about three years until output fell sharply.”

“This time around it didn’t take three years, not even three months. In three weeks there was a freefall of every component,” he added.

Professor Roubini also said any recovery will be in the shape of what economists call a “U”, or even “something closer to an L” – what he calls a “Greater Depression.”

A U-shaped recovery means that growth will fall and bottom out, and then pick up only after a prolonged period of slow or no growth, while L shaped recovery is even more drastic – falling sharply and staying there for an extended period of time.

That’s because of how many jobs have been lost in both poor and rich countries as a result of massive lockdowns to combat the virus.

Professor Roubini said: “These jobs that are gone are going to come back only in part, with lower wages, no benefits, part-time.”

“There will be even more insecurity of jobs and income and wages for the average working person.”

Bouncing back?

His warning of economic depression and debt comes when the coronavirus cases across the world tops five million, with many countries seeing a second wave of infections and struggling to reopen the business, easing restrictions – a key factor in whether economic growth can bounce back quickly.

He says: “You can open the stores but the question is whether they’re going to come back.”

China eases many restrictions, but most of the shopping centres in the country are still empty.

Half of the flights aren’t there.

According to his predictions, emerging Asia though will see better growth than “other advanced economies.”

But there will be a greater split between China and US , and many Asian countries will be forced to choose between the two superpowers.

“Each one of them is going to say to the rest of the world, either you are with us or against us,” Professor Roubini predicts.

The post-pandemic time will be either you use my AI systems, my technologies, and my 5G, or you are using one of my rival’s.

This will create a more divided world.”

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