Morgan Stanley Asia Chairman Steve Roach says the economy will improve over the next few years.
“But if you’re looking for a vigorous upturn, you’re not going to get it,” he says in an interview with the Financial Times.
“The recovery will be anemic, tentative and very fragile at best.”
He says that “at the root of the problem is a lot of excess consumption in the U.S. and the lack of any meaningful savings.”
And then, on the other side, “a lot of excess savings in countries like China, Japan and Germany, where there’s not much in the way of private consumption growth.”
What does the world need?
“A major shift in savings away from surplus savers and into deficit economies,” Roach says.
“Until we do that, there is a risk of further outbreaks of asset bubbles, excess leverage and another crisis.”
He says the recent G20 summit in London did little to address the financial crisis.
“It was long on ceremony, but short on substance in one key area,” Roach maintains.
“This crisis is about the unwinding of massive imbalances that have built up around the world. The G20 communiqué had nothing to say about those imbalances.”
Others were lukewarm about the conference too.
Lars Christensen, chief emerging market analyst for Danske bank, tells Reuters, “I don't think the markets will be overly excited about it, but there's no reason to be disappointed either. Nobody had really hoped for more than we're getting.”
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