Roubini says Turkey has potential for financial crisis in 2009

The year 2009 will be an economic stagnation and recession year for most of the global economy with deflationary pressures and a likely severe global recession, Roubini told FT adding that the return to positive economic growth would not be seen before 2010.

 

Emerging countries were another source of stress for the global economy, he also said.

 

"There are about a dozen of them that are on the verge of a potential financial crisis: Latvia, Estonia, Lithuania, Hungary, Bulgaria, Romania, Turkey, Ukraine in emerging Europe . . . Pakistan, Indonesia or [South] Korea in Asia," he said.

 

Turkey, facing a large financing shortfall in 2009 after the global crisis battered its markets and caused a sharp economic slowdown, had third-quarter economic expansion of 0.5 percent -- below a median forecast of 0.75 percent -- down from the revised growth of 2.3 percent in the second quarter.

 

The county is expected to sign a stand-by or a precautionary stand-by deal with the International Monetary Fund, whose support helped it recover from a financial crisis in 2001 to record economic growth around 7 percent, before slowing sharply in recent quarters.

 

"Places like Ecuador that just defaulted. Argentina and Venezuela in Latin America. Some of these countries could get in trouble and there could be contagious effects to other financial markets in other emerging markets," he said adding that this credit loss was going to spread from mortgages to commercial real estate, to credit cards, to auto loans, to leverage loans, to industrial and commercial loans.

 

Roubini, one of the first to warn about the U.S. housing bust had earlier told that recession in the United States would last 18 to 24 months.