Roubini warns Argentina is heading for a highly vulnerable “State capitalism”
Argentina is adopting measures that impact negatively on investors and consumers confidence warned US economist Nouriel Roubini who became world famous for having anticipated the international crisis of the sub-prime mortgages and junk bonds.
“Argentina has moved away from market oriented policies with imports substitution protectionist measures; national control over natural resources; a more predominant role for state companies and banks and discouraging foreign investments and the influx of capital” said the economist who was especially invited to the annual convention of the Argentine Chamber of Construction in Buenos Aires.
“These policies have a negative impact for investors and consumers’ confidence, which on the long run has its influence on growth”.
Roubini who is a professor at the New York Leonard Stern School of Business warned that Argentina is heading towards “a State capitalism” which could make the country “more vulnerable to domestic and external shocks”
He also underlined that “there is more optimism in developed countries about the economic recovery” of those now troubled economies.
But nevertheless he pointed out to a raft of risks related to the Euro crisis, the slow growth in the US, deceleration of the Chinese economy and emerging countries and geopolitical factors mainly in the Middle East.
Nourini said that the economic, banking and fiscal crisis in the Euro-zone already has spread to seven countries (Cyprus, Spain, Slovenia, Greece, Ireland, Italy and Portugal) and will continue for a long time because of the convergence of the high private and government debt levels.
He anticipated that the situation would create a slowdown in Germany and France combined with a mediocre growth in the US and the fiscal cliff danger feared for 2013.
The US must also agree to a fiscal consolidation given that it faces an 8% GDP deficit and a debt level of 80% of GDP.
His economic overview also included China with a “non sustainable economic model” since from growing 10% annually this year it is expected to expand 7.5%.
“They save too much and consume too little. Private consumption is in the range of 35% of GDP when in any economy the level is 60% to 65%”.
He added that even when the new Chinese leadership is aware of the problem, “my fear is that reforms are addressed at a slower pace than needed”.
So China instead of a soft landing could be faced with a “forced landing” which could impact on the global economy.
Finally Nourini warned about the persistence of a ‘geopolitical risk’ emerging from tensions between Israel and Iran and the growing difficulties in several countries following the “Arab spring” which could have an impact on oil prices.
Suggested Stories
-
May 23rd 2013
Beware inflation: CFK announces “political groups” will keep track of prices in shops
-
May 23rd 2013
Cristina Fernandez administration limits overseas dollar extractions to a minimum
-
May 21st 2013
Argentines expect inflation to average 34.9% in the next twelve months
-
May 20th 2013
Brazil trapped by Argentina and Venezuela economic mismanagements
21 comments Feed
Note: Comments do not reflect MercoPress’ opinions. They are the personal view of our users. We wish to keep this as open and unregulated as possible. However, rude or foul language, discriminative comments (based on ethnicity, religion, gender, nationality, sexual orientation or the sort), spamming or any other offensive or inappropriate behaviour will not be tolerated. Please report any inadequate posts to the editor. Comments must be in English. Thank you.
No, really??? do you think??
Thanks Nouriel Roubini, for stating the bl**din' obvious!!!!!!
Where were you when 90th years on Argentina ?
Nov 23rd, 2012 - 04:54 pm
And we all know how that little experiment ended!!!!!!!!!
It seems that KFC seems to think she can do a better job at it then China, Russia and lets not forget the best example yet starving their people...Cuba. I think the Argentines and Cubans will have a lot more in common then they ever thought possible.
Clever simon68
And do we all know why it ended?Can you tell us all in case we don't know?
#2 Elaine were you in the SWP as a student perhaps?
Meanwhile, Argentinian children and aboriginals from Salta, die of malnutrition while for economic and political reasons, soy is exported to feed China.
Mao did the same thing, sentencing many of his population to death so that could feed the Soviet Union and curry their favour.
Classic State control of the economy.
Freaking choices man!
ARGENTINA ALWAYS THE VICTIM
Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!