Wednesday, October 14, 2015
Brazil on the Brink of a Precipice Roubini Warns
Nouriel Roubini, one of the few economists who predicted the financial crisis of 2008, has warned, "Brazil is on the brink of a precipice."
Roubini argues that without fiscal adjustment, the country will lose its investment grade rating with other credit rating agencies (as has already happened with Standard and Poor's); borrowing costs will skyrocket; the real will go into freefall and the economy will shrink further still.
But Dr. Apocalypse, as the economist is known for his gloomy predictions, is not entirely pessimistic about Brazil's future. "Brazil isn't destined to have a crisis, it's possible to avoid it," he says. However, he says that for this to occur the country must run a surplus of at least 0.7% in 2016.
He estimates that Brazilian GDP will shrink by around 3% this year and remain stagnant or just slightly positive in 2016, as long as there is adjustment. According to the Focus report, the market expects recession of 2.85% in 2015 and 1% in 2016.
read more @ http://www1.folha.uol.com.br/internacional/en/business/2015/10/1693317-brazil-on-the-brink-of-a-precipice-says-roubini-but-crisis-may-be-averted.shtml
Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics