Looking ahead to 2014

'Dr. Doom' Roubini gets bullish on global economy

Nouriel Roubini, co-founder and chairman of Roubini Global Economics
Simon Dawson | Bloomberg | Getty Images

Economist Nouriel Roubini, renowned for his foretelling of doom and gloom in financial markets, has turned bullish in his 2014 outlook, expecting economic performance to "pick up modestly" in both advanced economies and emerging markets.

"The advanced economies, benefiting from a half-decade of painful private-sector deleveraging, a smaller fiscal drag, and maintenance of accommodative monetary policies, will grow at an annual pace closer to 1.9 percent," he said in an opinion piece on the Project Syndicate website on Tuesday.

"Moreover, so-called tail risks will be less salient in 2014."

(Read More: 'Dr. Doom' Roubini makes case FOR the US economy)

Threats of a euro zone implosion, another U.S. government partial shutdown, a debt-ceiling fight, a hard landing in China, or a war between Israel and Iran will be far more subdued, he said. Most advanced economies will still fail to reach true growth potential in 2014, he said, but explained that the positives for the U.S. economy included the shale-energy revolution, improvement in the labor and housing markets, and the flow of manufacturing back to the country.

He also expects emerging markets (EMs) to perform well next year. A fall in commodity prices in 2013 and fears over the "tapering" of U.S. Federal Reserve stimulus hit these economies hard, but Roubini expects them to grow faster this year - closer to 5 percent.

"Brisker recovery in advanced economies will boost imports from emerging markets. The Fed's exit from QE (quantitative easing) will be slow, keeping interest rates low. Policy reforms in China will attenuate the risk of a hard landing. And, with many emerging markets still urbanizing and industrializing, their rising middle classes will consume more goods and services," he said.

(Read More: Roubini: No Stock Bubble, but 'Huge' Crash Could Come Later)

US will be profitable investment: Pro
US will be profitable investment: Pro

Whilst some emerging markets will remain fragile he sees a better performance by those with fewer macroeconomic, policy, and financial weaknesses. South Korea, the Philippines, Malaysia, Poland, Chile, Colombia, Peru, Mexico, Kenya, Rwanda and the Gulf oil-exporting countries are included in this prediction.

The International Monetary Fund's latest outlook for global growth states that emerging markets would grow 5.1 percent next year, and developed economies to grow at 2 percent (year-on-year) after expanding by 1.2 percent last year.

Roubini, the co-founder and chairman of Roubini Global Economics, has seen his predictions come into the spotlight since successfully arguing in 2005 that home price speculation would sink the economy.

(Read More: 'Dr. Boom'? Roubini Sees Two Years of Stock Gains)

In the last five years his persistently bearish views have added to his moniker of "Dr. Doom". In March last year he told CNBC that investors should brace for a market correction in the latter half of the year as revenues would begin to disappoint. In June, he warned in a report published in Institutional Investor magazine that the Fed's monetary easing exit strategy would be "treacherous" and would lead to financial instability.

But despite the pessimism there have been signs that the "permabear" could be turning bullish. In particular, in September he made the case for the U.S. economy at a speech at IndexUniverse's Inside Commodities conference.

'Another strong year' for equities
'Another strong year' for equities

He maintained that the U.S. would in a better position than most of its global competitors, leading to an appreciation in its currency, no bond market crash and only a gradual increase in interest rates.

(Read More: Roubini: Fed Exit Strategy Will Be 'Treacherous')

Despite the upbeat feel to his 2014 predictions there are the usual caveats to his opinion piece for Project Syndicate. Years of underinvestment in human and physical capital in advanced economies mean there could be longer-term constraints and a risk of "secular stagnation".

In China, he sees resistance to the economic reforms set out in the recent Third Plenum of the Communist Party's Central Committee. A reluctance from local governments and state-owned enterprises to change means China's medium-term prospects remain worrisome, he said.

"In sum, the global economy will grow faster in 2014, while tail risks will be lower. But, with the possible exception of the U.S., growth will remain anemic in most advanced economies, and emerging-market fragility – including China's uncertain efforts at economic rebalancing – could become a drag on global growth in subsequent years," he said.

By CNBC.com's Matt Clinch. Follow him on Twitter @mattclinch81