US to avoid double dip recession: Roubini

Excerpts from Your World at 10 on CNBC-TV18 Watch the full show » RELATED NEWS Eurozone crisis will not impact US banks: FDIC NY manufacturing grows, US import prices slip ALSO READ See what other FIIs are saying about the markets See what other experts are saying about markets See what Udayan Mukherjee is saying about the markets

Even though advanced economies are fighting the fear of anaemic growth and the risk of a double-dip recession aided by sluggish employment and highly indebted governments, economist Nouriel Roubini is optimistic.

In an interview to CNBC's Joe Kernen and PIMCO's Mohamed El-Erian, Roubini said that the US is going to avoid a double dip recession. However he warned that in the second half of the year the growth is likely to be below 2%.

With a negative outlook for H2CY10, he said the US economy may be hit by high unemployment rate, fall of housing markets in terms of prices, large budget deficit and high losses that financial institutions get on loans.

Here is a verbatim transcript of the exclusive interview with Nouriel Roubini on CNBC-TV18. Also watch the accompanying video.

Kernen: What is the likelihood of a double dip recession?

Roubini: To distinguish which countries, I would say that the risk of a double dip recession is the highest right now in the Eurozone. I think that the sovereign problems, the debt problems are severe, the shock in the markets is going to be an economic downturn and that is very likely.

Kernen: 80%?

Roubini: I wouldn't say 80%. I would say there is more than a 50% probability, the Eurozone growth was expected by the IMF to be only 0.8% this year or they may surprise with 0. So if it is not technically a double dip affective is like one.

Kernen: Soros specifically was talking global or was he talking US?

Roubini: He was generic about it. In my view, in the US, we are going to avoid a double dip recession. But in the second half of the year, the growth is going to be below 2%. So, with growth at below 2%, the unemployment rate goes higher, the housing market keeps on falling in terms of prices, the budget deficit becomes larger, the losses that financial institutions get on loans, securities are higher. So we don't need a double dip recession for having a negative economic outlook. If he is right then I believe he is 100% right on the new normal, in US new normal needs 2% growth or below 3% potential that is a very bad economic outlook, it makes everything worse that means downside risk to financial markets.