Nouriel Roubini
Nouriel Roubini, New York University Professor of Economics says there will not be a repeat of 2008 Bobby Yip / Reuters

The ongoing stock market drop is not the sign of a bear market, rather "a correction", one leading economist has said, adding that a global recession or financial crisis like the one in 2008 is not on the cards.

New York University economics professor Nouriel Roubini did however warn that there needed to be a rapid response from central banks or the situation could get worse.

He said the plummeting cost of oil, the proxy wars between Saudi Arabia and Iran, terrorism and the risk of Brexit, plus China, were all factors in the market becoming nervous.

"I don't expect it's 2008 again. I don't expect a global recession or financial crisis. The current turmoil is driven by a bunch of factors, primarily concern that China might have a hard landing and collapse of its stock market and currency," he told Business Insider UK.

But he expected China's slowdown in growth meant that it would have "a bumpy" rather than a "hard" landing.

"Those who say it's 4% going to zero, I think they're getting it wrong. They don't realise that the service sector is rising and growing much faster than the manufacturing sector," he said in an interview on the fringes of the Economic Forum in Davos.

"Whether the correction becomes a true bear market depends on whether these shocks are more persistent or less persistent, first. And second on the policy response."

He said the Chinese would have to do a round of fiscal stimulus but there would also have to be strong responses from the Federal Reserve, while the European Central Bank and the Bank of Japan would have to ease more.

"If all central banks try to do more, you can maybe stop or reverse this particular correction. If you don't have a strong policy response, this could become an outright economic slowdown."