The euro has to fall to parity with the dollar to allow growth to return to the eurozone periphery, according to economist Nouriel Roubini.
Despite the debt crisis playing out in the currency bloc, the euro has stuck at high levels against the dollar – hampering the competitiveness of its 17 members.
Roubini, who earned the moniker ‘Dr Doom’ because of his bearish predictions, told CNBC: “The eurozone needs a real depreciation in the periphery to achieve the restoration of growth, external balance and competitiveness.
“The periphery needs to have the euro closer to parity with the US dollar.”
Roubini, who was speaking from the Ambrosetti Workshop in Italy, also suggested the markets are unable to agree whether the eurozone’s austerity efforts are ultimately aiding the region’s recovery.
“There’s this vicious circle with the deficit that doing austerity makes the recession worse,” he told the broadcaster. “Without growth, the socio-political backlash will become overwhelming for some governments.”