This week renowned economist Nouriel Roubini told the Associated Press that a military conflict with Iran could lead to a global recession. Roubini was interviewed at the World Economic Forum meeting in Davos, Switzerland:
- “We live in a world where there is still a huge amount of economic and financial fragility,” he said. “There is a huge amount of uncertainty — macro, financial, fiscal, sovereign, banking, regulatory, taxation — and there is also geopolitical and political and policy uncertainty.”
“There are lots of sources of uncertainty from the eurozone, from the Middle East, from the fact that the U.S. is not tackling its own fiscal problem, from the fact that Chinese growth is unbalanced and unsustainable, relying too much on exports and fixed investments and high savings, and not enough on consumption. So it’s a very delicate global economy,” Roubini said.
He said the biggest uncertainty is the possibility of a conflict with Iran over its nuclear program that involves Israel, the United States, or both. That could lead oil prices now hovering around $100 a barrel to spike to $150 per barrel, he said, and lead to a global recession.
Earlier this month Roubini also spoke to Bloomberg alongside Ian Bremmer, president of the Eurasia Group, about the outlook for the global economy. Roubini told host Margaret Brennan that in addition to various destabilizing factors in the Middle East, the “looming” possibility of military confrontation between Iran and the U.S. and Israel could cause “supply shocks to oil” this year. He noted that despite an upward trend in oil prices, oil markets have not yet fully reacted to the potentiality of war.