During an interview with FOX Business Network’s Maria Baritromo in Davos, Switzerland, Economist Nouriel Roubini discussed the state of the global economy and markets, addressing the meltdown that has occurred from the start of 2016.
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“It’s a combination of factors… one, there are worries again about China hard landing, a collapse of their currency and the stock market. I think those risks got overstated, it’s going to be a bumpy landing,” he said. “The U.S. economy is slowing down actually, so the Fed might have made a mistake starting to raise rates in December.”
Roubini also talked about the impactof oil prices.
“You have this collapse of oil prices which is be good for the global economy because you are redistributing the income from savers to spenders, but is bad because it is not just a supply story any longer, but there are concerns about the market, there is a weakness of global aggregate demand, of growth in China, in emerging markets, in the U.S. and so on.”
Roubini then took on what the policy response should be to global economic pressures.
“I would say it’s a combination of things, I’d say that both in advanced economies and emerging markets structural reform that increases potential growth have to occur, because potential growth has fallen, but those things take time, secondly you have to boost short-term economic growth and aggregate demand,” he noted.
“So far we have been relying a little too much on unconventional and conventional monetary policy, not enough on the right types of fiscal policy, and we have to continue unfortunately with unconventional monetary policy.”