Tags: roach | economy | recovery

Roach: No Recovery Until 2010

By    |   Tuesday, 30 Dec 2008 10:21 AM

Stephen Roach, chairman of Morgan Stanley Asia, says the economy will remain in recession through next year before beginning an anemic recovery in 2010.

“We’re in the early stages of a global recession,” he told Bloomberg TV. All the economies of Asia either have slowed sharply or entered recession, Roach points out.

“China is particularly distressed about the suddenness of the economic deterioration,” he explains.

“They’ve never managed in a down-cycle. That’s why they’re unfolding fiscal, monetary and currency policy measures to backstop the economy.”

Governments around the world are employing fiscal and monetary stimulus to boost their moribund economies.

“Governments are trying to take over where the private sector left off,” Roach notes. “That’s not a sustainable recipe for ongoing economic growth.”

Roach says it’s understandable that investors have flocked to Treasury securities.

“When you’re in a period of very low inflation bordering on deflation with the economy in recession, investors are well intended to go into riskless assets,” he says.

“Rates can go to unusually low levels for much longer than people think.”

Bottom line: “A year from now, I think the economy will be weak, and if it’s in recovery, it will be an anemic one.”

Others agree. “There’s just a lot of pessimism on the economy,” John Silvia, chief economist for Wachovia, told Bloomberg.

“The job cuts will continue, and that’s a real damper on consumer sentiment and spending.”

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Stephen Roach, chairman of Morgan Stanley Asia, says the economy will remain in recession through next year before beginning an anemic recovery in 2010.“We’re in the early stages of a global recession,” he told Bloomberg TV. All the economies of Asia either have slowed...
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2008-21-30
Tuesday, 30 Dec 2008 10:21 AM
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