The world economy is struggling with the consequences of a possible interest rate hike in the United States.
That says Willem Buiter, chief economist of the American bank Citigroup, Tuesday in London against CNBC television channel.
“The slowdown in emerging markets, which is almost a recession worldwide, is worrying,” says Buiter. “You see that mainly in China, but also in Russia and Brazil,” according to the British economist or Dutch descent.
Debt in the non-financial sector is still higher than in 2007, the year before the financial crisis broke out worldwide, says Buiter. “We are watching and being unable to act as we should.”
China, the second largest economy in the world, is struggling with a cooling economy. The government is aiming at a growth of 7 percent this year, but there is doubt about the correctness of these figures.
Also, investors worldwide fear that the Chinese are not able to control the turmoil in the financial markets. In September, the government surprised when the Chinese currency the yuan was devalued.
In 60 seconds: The Chinese stock market staircase
The possibilities of the tide are exhausted, Buiter thinks. Central banks, such as those in the euro zone, the United States and the United Kingdom, already have very low interest rates to drive and support economic growth.
There is a fear that if the central banks raise interest rates again, that moment will be close in the US, and more capital will be withdrawn from the emerging economies because more returns can be achieved elsewhere.
Expects that the growth of the world economy will fall below 2 percent before the end of next year. This leads to growth in unemployment in emerging markets and in a number of developed economies.
Finally, the economist expresses his concerns about the departure of Greece from the euro zone, a risk that, according to him, still exists. “Something has not changed, the Greek government has not shown that they can implement the changes.”