Balance Sheets To Be Increasingly Important In A Multi-speed World Recovery, Says Roubini

Top Quote In a recent interview with Finance IQ*, Arnab Das, MD of Roubini Global Economics discussed the longer terms implications of the financial crisis for the Nordic and Eurozone markets. End Quote
  • (1888PressRelease) August 25, 2010 - "Even though all the regions of the world went down into the recession all at once because of the global crash of 2008, we think there's this multi-speed emergence from the great recession because different countries face different balance sheet constraints, which impose different speed limits on the recovery. So those countries with the strongest balance sheet problems will have the weakest growth and visa versa."

    With specific regards to the Nordic region markets, Arnab is of the opinion that "with the Nordics, some of them suffered from being relatively small, but, on the other hand, their balance sheets are in much better shape than most of the rest of the Western world and, of course, Norway as an oil exporter is in relatively strong shape". "Their main exposure in a way was towards Eastern Europe rather than the legacy of toxic assets held in latent securities from the US and the UK".

    Arnab also expressed concerns about the sovereign debt crisis in the Eurozone and says that "it's going to be a tough adjustment and a tough slog and it's not at all clear that the risk of defaults or even cascading solving defaults through contagion has been contained by the Eurozone's trillion-dollar support package".

    But not all is gloom and doom: there are extensive investment opportunities in emerging markets as those countries are still catching up with the developed world: "in most of Asia, particularly India, and much of Latin America, particularly Brazil, the demographics are very good"; "their public sectors are not as indebted and their contingent liabilities in the form of social security commitments are much less - at least so far". "We in the West have way too little exposure to emerging markets (who) now generate about half of world economic activity and about 70% of world economic growth".

    Arnab Das will be addressing delegates at the upcoming Nordic Investors Forum, taking place 7-8 September2010 in Stockholm. His presentation on day one of the conference, "The Macro picture: Where are the markets now?" will expand on the current multi-speed world recovery, the importance of balance sheets for sovereign financial health and why "people need to take a closer and harder look and probably put more of their resources to work in emerging markets".

    Finance IQ's full interview with Arnab Das is now available in podcast or transcript format at, as well other complimentary learning resources.

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