Nouriel Roubini, co-founder and chairman of Roubini Global Economics LLC., assumes that some of the most powerful economies in the world may face a recession if they do not take urgent steps within a year:
“Unfortunately, in my view there is a risk, at least a 50 percent probability, that in the U.S., in the eurozone, in the United Kingdom, and in most advanced economies, the future in the next 12 months might suggest a recession, a downturn, rather than reacceleration of growth…”
The eurozone crisis is escalating. Mr. Roubini assumes that it may spread over other economies outside the region as the steps taken by EU leaders are not sufficient to overcome the crisis.
Nouriel Roubini’s opinion
Mr. Roubini says multiple changes are necessary in Europe’s financial mechanism as we can see the crisis infecting one European bank after the other. Without radical steps there is a 50% probability that the American, British and European economies won’t see any recovery and may even fall into recession. At the same time the mentioned economies are fairly flexible and powerful as they can still resist the crisis.
The multiple problems experienced by some developed economies force emerging economies to look for ways and means of protecting their markets. For example, last week the Central Bank of Brazil reduced the borrowing costs by 0.5%. The Philippines allocated $ 1.7 billion to stimulate the national economy. Earlier this month Indonesia unexpectedly cut its benchmark interest rate for the first time in 2 years.
Emerging economies look stronger, more powerful and resilient because the recent slowdown is moderate.
Expert opinions: threats for the EU
Market Leader previously reported that EU and eurozone leaders had discussed a range of anti-crisis measures during the latest summit in Brussels. The next summit is scheduled for tomorrow, Oct 26th. The leaders are expected to approve specific measures and to work out efficient solutions, including bank recapitalization, expansion of the EFSF etc.
experts note that there was some confrontation between David Cameron and Nicolas Sarkozy. The British Prime Minister expressed his fears that ”there is danger that as the eurozone comes together that those countries outside might see the eurozone start to take decisions on some of the things that are vital to them in the single market, for instance financial services…”
Nikolas Sarkozy gave a tough reply: ”We’re sick of you criticizing us and telling us what to do. You say you hate the euro, you didn’t want to join and now you want to interfere in our meetings…”
The analysts of Nord FX assume that Nikolas Sarkozy is trying to exert pressure on the UK and other non-eurozone members of the EU because now the EU is divided in 2 groups: eurozone and non-eurozone members.
Moreover, during the forthcoming summit the eurozone members are planning to introduce a common economic space.
EURUSD prospects
According to the Department of Masterforex-V trading System, EURUSD is in the process of forming a long-term upswing – wave A(C )/ C. The closest levels of resistance are 1,3999 and 1,4094. The rally will be over as soon as the price comes out of the MF sloping channel and breaks below the MF pivot 1.3703 (as shown below):
