Nobel Laureate warns of world economic relapse

US: Despite alleged signs of recovery, Nobel Economy Laureate Paul Krugman warned over the next six to eight months, there will be a strong possibility of a setback in the economy.

According to his predictions, the extreme phase of global crisis has been overcome, but return to prosperity is a long way off.

In recent statements to the press, Krugman said he did not know if there will be a new recession, but forecast a slower growth.

He explained that the current increase has to do with recovered inventories during the crisis, so it will end its positive influence by the end of the year.

He also indicated that the bailout programs and fiscal expansion schemes will disappear by the beginning of 2010, so the world will be facing a long process of recovery for a long time.

The prestigious US economist affirmed the economic activity has stabilized and some indicators show improvement, like industrial activity, but he said employment is still dropping. He explained that through history, econometric models show that after economic crises, there are periods between four and eight years for unemployment to reach its peak before it begins to withdraw.

"If the crisis began in 2007, unemployment will keep growing until 2012 and that is not very encouraging," he said.

As to the Dollar situation in the market, he thinks its reign as exchange and reserve currency pattern will continue, as not even the Euro can compete with it.

Washington, Prensa Latina