The Unites States, Europe and Japan will face a period of low economic growth due to the impact of a balance-sheet recession, where governments, individuals and banks are forced into austerity measures, Nouriel Roubini, economics professor and chairman at RGE.com, told CNBC Friday.
But central banks and governments should not "do too much" in the case of additional stimulus measures as it would lead to a situation similar to Greece, Roubini said.
People will wake up and see runaway fiscal deficits that will have to be monetized, which could lead to risk going up and a crowding out of the recovery, he said.
In the U.S. the "economy is going to be sluggish, the labor market is going to be sluggish," Roubini predicted.
Growth in the first half of the year will be positive in the U.S., but that in the second half, the country will go back to slumping growth, he added.
The U.S. needs 125,000 jobs created a month for unemployment to stabilize and 150,000 jobs a month to show an actual recovery in the market, Roubini said.
But the fiscal problems in the U.S. will emerge later because of the status of the dollar as reserve currency, Roubini said.
Countries with strong growth, like China, should tighten their monetary policies soon because postponing tightening means overheating will continue, and that poses a downside risk in the country's economy, he said.
"My worry about China is that if they are not doing enough early on, they are left to do more in the second half of the year and there will be a slowdown in the U.S., Europe and Japan and then we are forced into a double-dip on the global level," he added.
Roubini also warned against another asset bubble due to proprietary trading because banks are "back to business."
Increased taxing and regulation is likely to take place in the financial sector, he added.