Nouriel Roubini, Dr Doom, says Grexit would be a catastrophe

19/7/2015

By Sophia Grene

Nouriel Roubini, the renowned economist known as Dr Doom, told FTfm the consequences of Greece leaving the euro would be “catastrophic” for the global economy.

Mr Roubini, a former senior adviser to the White House, said that if Greece left the eurozone, the fallout would be far wider than the inevitable pain for the Greek economy.

“It will not happen because the consequences would be too terrible,” he said.

Greece has reached an uneasy deal with its creditors to prevent it crashing out of the eurozone.

Mr Roubini, known as Dr Doom for his predictions on the US housing crash and global financial crisis, said the biggest danger of a Greek departure would be that Greece’s ties with Russia would grow stronger. He said this could enable Russia to regain influence in the Balkans at a time when its dealings with Ukraine is already a concern for politicians.

He said: “We could see Russian influence extending in the Balkans again.”

Mr Roubini, who teaches at New York University’s Stern School of Business, added that further risks from a so-called Grexit would include the break-up of the eurozone and an increased likelihood that the UK would leave the EU entirely. He said it would also raise questions over Greece’s membership of Nato.

Mr Roubini was confident the deal would go through and be effective.

“It includes the structural reform and investment needed to improve Greece’s growth potential,” he said.

Roubini Global Economics, his macroeconomic research company, has long identified Greece as a troublemaker in the eurozone. It was in the bottom three of the RGE Country Insights table of eurozone countries from 2005-2012 and has not improved since, unlike Ireland and Spain.

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