Dubai: There is ‘quite a good chance’ of a global recession late this year or next year, Nobel Prize-winning economist Paul Krugman has warned, citing a general lack of preparedness among economic policymakers.
Speaking at the ‘World Government Summit’ here Wednesday, the Nobel Laureate said it was unlikely that just ‘one big thing’ would prompt an economic downturn. He stated a range of economic headwinds would increase the likelihood of a slowdown.
“I think that there is quite a good chance that we will have a recession late this year or next year,” Krugman told a gathering.
“The main concern has always been that we don’t have an effective response if things slow down… We don’t seem to have a safety net,” the eminent academic added.
Noting that the central banks often lack the tools available to insulate against market turmoil, Krugman said the planning for risk has been minimal. He pointed out that though trade wars and growing protectionism continue to dominate policy agendas, deferring attention and resources from what should be the real priorities.
Krugman said stagnant wages, growing inequalities and a loss of confidence in the world’s business leaders have created a spirited populist backlash against globalisation.
“The result is clear: Forward motion on globalisation has stopped, but it was slowing anyway,” asserted the Nobel winner.
“The question is what we want as the solution… Turns out that’s not as clear,” Krugman said, pointing to the gap that leaders must fill in order to avert the next Great Depression.
Krugman is a professor emeritus of Princeton University’s Woodrow Wilson School. He won the Nobel Prize in 2008 for his work on economic geography and identifying international trade patterns.