Patrick Allen
CNBC
July 15, 2010

  • A d v e r t i s e m e n t
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The global economy is at risk of folding in on itself unless policy makers face up to the threat of inflation and exchange rate inflexibility, according to Arun Motianey, director of fixed income strategy at Roubini Global Economics.

A Japan-like outcome is a big risk for the developed world with deflation a big danger, he said.

Recent figures show that the recovery is sputtering in the US while China’s booming growth has slowed down slightly, as Beijing unwinds stimulus measures.

The Bank of Japan revised upwards is economic forecast but reiterated it will maintain its easy money policy.

In his new book “SuperCycles” Motianey says the world has managed to recover from a number of shocks since the Latin American debt crisis, but getting over the financial crisis will be much harder.

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