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"In the last few months policymakers have been using every weapon at their disposal, and the risk of a true depression has been reduced from say 30% to 15%. That said, we’re not close to the bottom yet" Nouriel Roubini |
China’s economic stimulus package offers only a temporary respite from the country’s – and indeed the world’s – current woes, believes Nouriel Roubini, professor of economics at the Stern School of Business, New York University and chairman of consultancy firm RGE Monitor. "We have to think about changing the system of global current account imbalances," he said on a panel discussion at the Boao forum in China, "because we cannot continue with the present system of having the US as the consumer of first and last resort, over-borrowing and over-leveraging, while surplus countries like China are spending less than their income."
In an interview with Euromoney after the panel, Roubini expands on his ideas.
"There are many reasons why the Chinese save," he says, "and increasing private consumption requires serious structural reforms that will take years to implement. What you can do is increase public domestic demand, but only for a short while and in my view that’s been very slow to happen.