It's interesting how a phrase that makes me think of ice cream has become part of an economic bugaboo. There could be a double-dip recession next year, warned Singapore Finance Minister Tharman Shanmugaratnam on Wednesday.
He was echoing the Nobel Prize winning economist Joseph Stiglitz and Nouriel Roubini, who predicted the economic crisis.
Stiglitz, the former World Bank chief economist who won the Nobel in 2001, warned on Monday there was a "significant chance" that the economy could contract again after a period of growth, reported the BBC. This is what economists refer to as a "double-dip" recession, it added.
Roubini expressed the same fear in the Financial Times on August 23. This was picked up two days ago by the Huffington Post, which linked to his interview with Martin Wolf of the Financial Times. Click on the Huffington Post link to see the video interview.
Tharman said the worst of the crisis is over, thanks to government stimulus packages and companies restocking for business, but the economy could go downhill again unless people start spending more. Here is the full text of his speech, provided by the Singapore government.
Nouriel Roubini, one of the few economists who accurately predicted the magnitude of the world's recent financial troubles, sees a "big risk" of a double-dip recession, according to an opinion piece posted on the Financial Times' website.
Roubini, a professor at New York University's Stern School of Business, said it appears the global economy will bottom out in the second half of this year, and that U.S. and western European economies will likely experience "anaemic" and "below trend" growth for at least a couple of years.
Yet he warned that policymakers face a "damned if they do and damned if they don't" conundrum in trying to unwind their massive fiscal and monetary stimuli to keep the global economy from toppling into a depression.
He said that if policymakers try to fight rising budget deficits by raising taxes and cutting spending, they could undermine any recovery.
On the other hand, he said if they maintain large deficits, worries about excessive inflation will grow, causing bond yields and borrowing rates to rise and perhaps choking off economic growth.
Roubini said another reason to worry is that energy, food and oil prices are rising faster than fundamentals warrant, and could be driven higher by speculation or if excessive liquidity creates artificially high demand.
Roubini said the anaemic growth he expects would follow a couple of quarters of rapid growth, as inventories and production levels recover from near-depression levels.