Roubini sees spread of EU debt crisis as key 2011 risk

Nouriel Roubini, the New York University economist who predicted the global financial crisis, said a key risk to the world economy in 2011 is the likely spread of Europe’s debt crisis.

“One of the most important risks is financial contagion in Europe if the euro zone’s problems spread, as seems likely, to Portugal, Spain and Belgium,” Roubini wrote in an article in the Australian Financial Review Tuesday. 

Nouriel Roubini. (Bloomberg)

He also said the U.S. faces a likely “double dip in the housing market,” weak job creation and “gaping budgetary holes” at the state and local levels this year. Credit growth on both sides of the Atlantic will be restrained as many financial institutions maintain a risk-averse stance, he wrote.

Roubini said global growth this year will be shaped by “an anemic, below trend, U-shaped recovery in advanced economies” and a “V-shaped recovery” in emerging countries due to their stronger macroeconomic, financial and policy fundamentals. That means about a 4 percent global expansion, with advanced economies growing by about 2 percent and emerging-market countries by about 6 percent, he wrote. 

(Bloomberg)