By Karen Leigh
MENA’s potential will offset any short-term economic slump caused by unrest, says top economist
Nouriel Roubini, the economist who predicted the global
financial crisis, said rising oil prices pose little threat to the stability of
the global economy.
Energy prices have spiked in the wake of widespread Arab unrest
but the risk of a double-dip recession remains low, Roubini said at the Middle
East Investment Summit in Dubai on Tuesday.
“At the current
level, the effects on economic growth are going to be relatively modest,” said
the CEO of Roubini Global Economics. “There’s going to be a reduction in economic
growth, but that effect will be relatively modest.”
However, should the political situation escalate – particularly
in Libya, one of the world’s top oil producers – it could take a toll on
“If [the price of oil] rises much more sharply,” he said, economies
in the West that don’t have access to giant oil reserves could see an economic
“There is a scenario that could get worse and oil prices
could get higher. And oil is important for the global economy.”
In summer of 2008, oil reached $140 per barrel, a factor
Roubini dubbed as “one of the tipping points” for the recession that began in
the fall of 2008.
In MENA, he said the region’s potential for long-term growth
would offset any short-term slump caused by unrest.
“While there is concern about the Middle East, there are
also prospects for significant economic growth in the [MENA] region,” he said.
Turkey and India - whose economies are becoming further
integrated with those in the Gulf – “might actually do better than [countries
like] China, which are changing from economies based on net exports to those of
He referred to the global economy’s current situation as
“glass half full, glass half empty.”
“There’s opportunity but plenty of significant risk.”