The global economic recovery may be threatened by an array of “powerful shocks” including Japan’s record earthquake and Europe’s sovereign debt crisis, said Stephen Roach, nonexecutive chairman of Morgan Stanley (MS) Asia. The impact of Japan’s magnitude-9 earthquake, together with the euro-region’s funding problems, turmoil in the Middle East, and a jump in oil prices are “worrisome” as the global economy’s rebound from the recession of 2008 and 2009 remains weak, Roach said at a conference in Beijing today. “When you have a weak recovery, you don’t have a cushion that allows you to be able to withstand shocks,” Roach said. “Right now we have a lot of shocks. We are too optimistic on global growth.” Global equities lost about $1 trillion of market value this week and the yen touched a post-World War II high amid concern the March 11 temblor and tsunami and the nuclear crisis they triggered will hurt Japan’s growth. Crude oil reached a 29-month high of $106.95 a barrel in New York on March 7, as unrest that has already unseated rulers in Tunisia and Egypt spread to Bahrain and Libya. More stimulus may be needed to spur a global recovery, Joseph Stiglitz, the Nobel Prize-winning economist, said in Beijing as well. The U.S. Federal Reserve has joined the European Central Bank in holding interest rates unchanged after adding to its bond purchase plan last year to bolster growth. “Austerity has never worked and won’t work in the current context,” Stiglitz said today. “Unfortunately, many of the countries in Europe and elsewhere are focusing on austerity which means the prognosis in many of these countries and therefore the global economy on that side is rather pessimistic.” To contact the Bloomberg News staff on this story: Kevin Hamlin in Beijing on khamlin@bloomberg.net To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net

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