Nouriel Roubini - The Global Economy's New Abnormal

Project Syndicate runs this article by economist Nouriel Roubini. In it he laments that it appears that the days of strong growth are gone and not to return any time soon. This is something that is now seemingly pretty much accepted with IMF Director Christine Lagarde using the term the "new mediocre" to describe prospects for global growth a number of times. Below are a few quotes from the Roubini article.

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"Since the beginning of the year, the world economy has faced a new bout of severe financial market volatility, marked by sharply falling prices for equities and other risky assets. A variety of factors are at work: concerns about a hard landing for the Chinese economy; worries that growth in the United States is faltering at a time when the Fed has begun raising interest rates; fears of escalating Saudi-Iranian conflict; and signs – most notably plummeting oil and commodity prices – of severe weakness in global demand.


And there’s more. The fall in oil prices – together with market illiquidity, the rise in the leverage of US energy firms and that of energy firms and fragile sovereigns in oil-exporting economies – is stoking fears of serious credit events (defaults) and systemic crisis in credit markets. And then there are the seemingly never-ending worries about Europe, with a British exit (Brexit) from the European Union becoming more likely, while populist parties of the right and the left gain ground across the continent.

These risks are being magnified by some grim medium-term trends implying pervasive mediocre growth. Indeed, the world economy in 2016 will continue to be characterized by a New Abnormal in terms of output, economic policies, inflation, and the behavior of key asset prices and financial markets. So what, exactly, is it that makes today’s global economy abnormal?"    . . . . . . . . . .


"Welcome to the New Abnormal for growth, inflation, monetary policies, and asset prices, and make yourself at home. It looks like we’ll be here for a while."

Click here to read the full article