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- Nouriel Roubini thinks the global economy will avoid a worst-case scenario this year.
- That's despite his reputation as a permabear, which has earned him the nickname "Dr. Doom."
- But he added that risks remain, such as geopolitical turmoil.
The world economy will likely dodge the worst-possible outcomes this year, according to long-time permabear Nouriel Roubini.
Acknowledging that most economists' predictions for recession in 2023 were wrong, he wrote in Project Syndicate on Monday that forecasters should approach 2024 with "humility."
"For now, the worst-case scenarios appear to be the least likely. But any number of factors, not least geopolitical developments, could be this year's forecast spoiler," Roubini wrote.
His relative ray of optimism strayed from his typical gloomy predictions, which have earned him the nickname "Dr. Doom" as he has routinely warned of coming economic and financial market crashes over the years.
Instead, Roubini said the US and other advanced economies look likely to achieve a soft landing, which he called the best outcome for stocks and bonds at it avoids both a recession and inflationary rebound.
While a soft-landing has now become the baseline call for most economists, Roubini added that there's also potential that the US achieves no landing, where growth remains resilient and disinflation doesn't meet market hopes. This isn't good for stocks nor bonds, as it implies monetary policy will have to remain higher for longer.
There's also the chance of a "bumpy landing" that involves a short, shallow recession as well as a more severe recession, though he said that looks unlikely.
"With respect to the global economy, both a no-landing scenario and a hard-landing scenario currently look like low-probability tail risks, even if the probability of no landing is higher for the US than for other advanced economies," Roubini said. "Whether there is a soft landing or a bumpy landing then depends on the country or region."
He even sees China possibly avoiding the worst-case outcome as Beijing is expected to implement moderate stimulus that is enough to put 2024 growth slightly above 4%.
"Ultimately, China may avoid a full-scale hard landing with a severe debt and financial crisis; but it likely looks like a bumpy landing ahead, with disappointing growth," he said.
To be sure, Roubini highlighted several risks that will continue to loom.
Geopolitical turmoil between the US and China could add risk, spurring lower growth and lower inflation. Investors will also be watching the US presidential election for any added shock, though its outcome will be more of a factor in 2025, he said.
Other potential stagflationary shocks include a spike in energy prices if the Israel-Hamas conflict escalates into a wider regional war involving Hezbollah and Iran that disrupts oil production and exports, Roubini said.