Marc Faber has warned it is a ‘100% certainty’ the global economy will slides into recession in 2013.
The economist, nicknamed ‘Dr. Doom’, is in defensive mode, saying barring a few exceptions, risk assets have made ‘outsized gains’ since 2009 and now the priority is to lock in those returns.
Dr Doom's gloomy predictions have often been proved right, as shown by a recent Citywire analysis of his calls and those of his rival, Nouriel Roubini.
Speaking to CNBC, Faber (pictured) said: ‘I think we could have a global recession in 2013. I rate it as a 100% certainty.’
He pointed to slowing growth rates in China and the US, adding that real GDP growth in America would be negative if the rise in the cost of living was calculated ‘properly’. He expects the slowing German economic to join the rest of the Eurozone in recession and cautioned that emerging markets will be hit hard on the back of weakened demand, particularly from China.
‘What disturbs me most about asset markets is that we have had outsized gains since early 2009 (there are exceptions such as Vietnamese, Chinese, Japanese and European equities, and also US housing,’ he said. ‘In my opinion, investors' expectations about future returns on their assets are far too optimistic. In a world that currently hardly grows investors will need to reduce their future return expectations.
‘I believe 2013 will not be a favourable year for holders of assets. My priority has now shifted to the preservation of the outsized gains I have achieved over the last three years.’
Faber warned in April that the S&P 500 faces a correction.