Double-Dip Recession Still in the Picture: Roubini

The United States, Europe and Japan still face the possibility of a double-dip recession and at the very least will experience below-potential economic growth for the next couple of years, economist Nouriel Roubini told CNBC Monday.

cnbc.com Nouriel Roubini

By contrast, China and India have the best chance of leading the recovery, Roubini said.

The double-dip is still possible because of very large budget deficits that are being monetized by monetary-policy authorities, Roubini, co-founder and chairman of RGE Monitor, said, speaking at the Diggers and Dealers mining conference in Kalgoorlie, Australia.

If central banks continue to monetize the deficits, "long-term bond yields may go higher, and they may crowd out the economic recovery leading to a double dip," he said.

For the U.S., Roubini reiterated his position that the recovery would only start at the end of this year, with 1 percent growth in 2010 and 2011, as opposed to 3 percent potential.

With weakness in the labor market and housing market and consumers and production still not recovered, "I'm very cautious about the United States," he said.

Commodities Could Fall

There is a risk that commodities prices could retreat from their recent run-up, Roubini said.

China may not be able to keep up the demand of commodities it fueled in the first half of the years, while much also depends on how much advanced economies can rebound he said.

As for China's outlook, it will take many years for the country to create the kind of social safety net that lower the high rate of private savings and boost the amount of private consumption, Roubini added.