We're in the Flat Part of Square Root Recovery: CEO
The economic recovery is following the shape of a square-root symbol and is now stuck in the flat section, Douglas Hansen-Luke, CEO of Robeco Middle East investment house, told CNBC Friday.
"We're not going to have a double dip, but if you think of a square-root sign where you have the recovery and then it's just flat lining… We view that now as the most likely outcome," Hansen-Luke said.
"We certainly don't see anything exciting for the underlying economy and the stock market is reflecting that," he said.
- Watch the full interview with Douglas Hansen-Luke above.
Ever since the recession took hold, market watchers have debated what shape the recovery may take. A 'V' shape would signal a solid bounce back to growth, whereas a 'W' shape means a double dip. Even a Nike swoosh symbol has been mulled over as a potential model, indicating a slow and steady recovery.
The idea of a square-root shaped recovery was put forward byMerrill Lynch back in May. They described it as an initial sharp recovery followed by an extended period of stagnant or slow growth as the economic headwinds take their toll.
Hansen-Luke pointed out that recent weakness in the dollar could provide a boon for American exporters.