By Souhail Karam
Alan Greenspan says longer growth stalls more likely economy will start to contract.
US economic growth has stalled and recovery may take longer than usual, former US Federal Reserve chairman Alan Greenspan said on Monday.
"As of right now, US economic growth is at zero," Greenspan said at an investment conference in Jeddah. "We are at stall speed."
"Recovery might take longer to emerge than it usually does," he added.
The longer growth stays at zero, the more likely the world's largest economy would start to contract, he said, adding that globalisation of trade could ease some shocks.
"Growing globalisation of trade and the economy would facilitate the absorption of shocks in the US," he said.
In updated economic forecasts released last week, the US central bank lowered its outlook for 2008 growth by a half percentage point to between 1.3% and 2%, citing the prolonged housing slump and bottlenecks in credit markets.
The Fed said at the time it was worried the economy could face further setbacks, even after a series of interest rate cuts.
Greenspan also said a boom in oil prices, which hit a record of $101.32 on Wednesday, will "go on forever".
Soaring crude prices have kept US inflation high, even as growth slows. (Reuters)