• A Trump reelection in November poses the biggest looming risk to the world economy, Nouriel Roubini warned.
  • The famed economist pointed to risks stemming from Trump's economic policies.
  • A second Trump presidency could end up making inflation and the national debt problem even worse, Roubini said.

Trump being reelected might be the biggest looming threat to the global economy, according to "Dr. Doom" economist Nouriel Roubini.

Roubini, known on Wall Street for his bombastic and persistently negative prognostications, warned in an op-ed for Project Syndicate that Trump winning a second term as President could cause the world economy to be "even further destabilized." That comes amid existing geopolitical tensions, with war raging in Ukraine and Gaza, and a potential cold war between the US and China breaking out later in the decade, Roubini predicted.

The biggest risk of destruction stems from Trump's economic policies, Roubini said, which could open the door to a whole new set of problems.

Under Trump's presidency, US protectionist trade policies would undoubtedly "become more severe," Roubini said. The former president has already said he would hike taxes on US imports from 2% to 10%. That could spark a trade war between some of America's most important partners, leading to de-dollarization, more supply chain chaos, and a host of other problems, he warned.

"A trade war would reduce growth and increase inflation, making it the largest geopolitical risk that markets should consider in the months ahead," Roubini added.

That spells trouble for the US in particular, where the economy is already on rocky footing. GDP growth eased to 3.2% over the fourth quarter, according to the Commerce Department's latest estimate. Meanwhile, inflation still remains above the Fed's 2% target, with consumer prices rising 3.1% in January.

Roubini also argued that Trump's presidency could bring stagflation risks, a scenario where prices spiral out of control while growth remains weak. That stems from Trump's "denialist attitude" on climate change, as well as the likelihood that he would replace Fed Chair Powell with a "more dovish, pliant figure," who could cut interest rates prematurely and allow inflation to surge higher, Roubini suggested.

Trump's promised tax cuts also risk making the US debt mountain even worse. At the current pace of spending, the US is tacking on another trillion in debt every 100 days, per an analysis from Bank of America. 

"With private and public debts high and rising, that would introduce the specter of a financial crisis," Roubini warned. "Trump's proposed economic-policy agenda is now the greatest threat to economies and markets around the world."

Roubini, for what it's worth, has repeatedly made calls for a stagflation, debt, or financial crisis of some kind for the last 20 years. In 2022, he warned markets of a coming stagflationary-debt crisis, which could spark a painful recession and 30% plunge in stocks. He's since rolled back his prediction, adding in a recent Bloomberg interview he was worried the economy was doing too well to warrant rate cuts that could buoy financial markets.