The global economy looks set for a classic oil-shock recession this year intensified by war fears with Asian economies unlikely to escape the effects, Morgan Stanley's chief economist said in a published interview yesterday.
Stephen Roach, reputed to be one of Wall Street's most prominent bears, told the Business Times oil prices today are almost 90 percent higher than in January 2002.
"That's a shock," he was quoted as saying. "And that sort of shock has always caused recession in the past, with no exceptions."
The likely recession, the second in three years, would, however probably be mild, Roach predicted.
Uncertainties about a possible war with Iraq, global terrorism and an Islamic backlash in a post-Saddam era are "geopolitical undercurrents that add a new element to a classic energy shock which makes it more lethal," Roach said.
"I don't think Asia has enough in the way of autonomous external demand to enable it to withstand a shock to its largest external market," Roach said.
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