Emerging markets are at risk of overheating and advanced economies face years of anaemic growth and could face a ‘double dip', the economist known as Dr Doom warns.
Nouriel Roubini, the man who predicted the US housing crash, says developed nations will need to cope with the dual impact of sluggish employment and highly indebted governments, Reuters reports.
"Labor market conditions will remain very weak in some advanced economies," Roubini says.
"Savings will have to rise faster than consumption for the coming years. That is why growth will remain anemic."
Greece, Spain, Portugal and Ireland face serious competitiveness bottlenecks that could hamper their recovery, Roubini added.
In emerging markets however, Roubini says many risk overheating and are showing symptoms of a potential asset bubble.
With investors in the developed world pushing into the developing world in the search for higher yielding assets, Roubini says it is time for emerging markets to remove economic stimulus to avoid forming an asset-price bubble. There is also a risk economies would overheat in the BRIC countries, he adds.
Referring to Brazil, Roubini says: "Over the next years you have to push forward with a number of structural reforms to achieve six-plus (%) growth a year."
There was also more room for gradual monetary tightening in Brazil to avoid inflation "getting out of control".
On China, Roubini added its economic outlook was full of mixed signals.
He says high inflation was a worry and there were signs of an asset bubble forming. He believes steps by the Chinese to cool the economy could also be counterproductive, posing an additional obstacle to already sluggish global economic growth.
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