Nobel Prize-winning economist Paul Krugman said at a conference in Dublin on Friday that the world’s economy is showing “not a hint” of a “V-shaped” recovery and raised the possibility that this global recession could turn the euro zone, like the U.S., into the kind of “lost decade” experienced by Japan in the 1990s.
From Bloomberg: The economy is “stabilizing, not recovering,” Krugman said…“Things are getting worse more slowly.”
Data this month showed that the contraction in Europe’s manufacturing…is easing and confidence in the economic outlook is rising. The U.S. lost fewer jobs in May than forecast….The [IMF] says its forecast for global growth of 1.9 percent next year is based on the premise of a healthy financial system.
“We have made the transition from sheer panic to chronic anxiety,” Krugman said, adding he has a “hard time” seeing what might drive a “full” economic recovery.
The Nobel Prize-winning academic also suggested, according to the Irishtimes, that significant economic pain was yet to emerge from the global commercial property sector. “It looks like it’s going to be worse than anybody imagined,” Krugman said.
Krugman predicted smaller banks around the world were “about to hit big losses.”
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