Emerging market instability top risk in 2013 - Eurasia's Bremmer

NEW YORK Mon Jan 14, 2013 11:35pm GMT

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NEW YORK (Reuters) - Political instability in emerging markets, led by China, will be one of the biggest risks for markets in 2013, Ian Bremmer, president of political risk firm Eurasia Group said on Monday.

"I think that emerging markets in general, the level of political instability, is underpriced for 2013," Bremmer said at a Thomson Reuters Newsmaker event in New York.

China, the world's second largest economy, is high on the lists of worries, he said, citing ongoing tensions with Japan and uncertainty about the investment atmosphere.

"The level of uncertainty around investing in China is many magnitudes greater than it is in the United States, but no one ever says they're on the sidelines because of uncertainty in china," Bremmer said.

Nouriel Roubini, chairman of Roubini Global Economics and an economics professor at New York University's Stern School of Business, added that China was the biggest risk for the second half, when he said growth could slow to around 6 percent -- not a hard landing but a slowdown that could hurt global growth.

"It's not a hard landing, but close enough," he said. "I still worry about a hard landing in China."

"My fear is the new leadership is very cautious and will carry out reforms much more slowly than necessary," he added, adding rapid stimulus spending could turn into an investment bust in the second half of 2012.

China's annual economic growth is expected to have quickened to 7.8 percent in the fourth quarter, a Reuters poll showed, after seven quarters of weaker expansion.

(Reporting By Steven C. Johnson and Jennifer Ablan; Editing by Diane Craft)

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