Bumped ~
Jordan's economy will continue to grow. The U.S. recovery is like a flash of lightening. It will be spectacular but short.
25 October 2009
Following is a summary of the presentation delivered by Regional Head of Research Middle East, Pakistan and North Africa at Standard Chartered Bank, Mr Marios Maratheftis, during the roundtable meeting held with the Jordanian media representatives last Sunday at the Four Seasons Hotel in Amman.
The global recession is ending and focus is now on the recovery. We use three physical phenomena to describe our view on the present economic situation. First, the US recovery is like a flash of lightning, it will be spectacular but short. Second, the crisis started in the financial sector and as a result there is a tidal wave of controls coming up that can be an overkill on the economy. And third, in the current situation we expect to see a volcanic eruption underneath the USD. When it comes to Jordan we hold our view that the economy will continue to grow, despite the global challenges.
Flash of lightning: Historically, the US economy tends to recover strongly following a deep recession.
This can be the case in the coming 2-3 quarters, especially if one takes into consideration the very strong policy response and the rebuilding of inventories. But the US is still overleveraged, and unemployment is likely to continue rising in 2010. Beyond the initial rebound we expect the US economy to revert to positive, but low rates of growth.
Tidal wave: The regulatory environment is changing, given that the global crisis started in the financial sector in the West. The risk is, however, that we might go from one extreme to the other, and too much regulation can prove to be an overkill on the financial sector and the economy.
The world economy continues to be imbalanced, and changing this will be a long process. Asia needs to save less and spend more and the US needs to save more and spend less. There is also a need for the development of deeper capital markets in Asia and the Middle East so that these economies can absorb effectively capital inflows.
Volcanic eruption underneath the USD: Asian countries, including China, seem to be willing to passively diversify their reserves away from the dollar. The dollar is still the world's reserve currency and it benefited in the past from being the most liquid currency in the world. Now, that growth expectations in the world have bottomed out, weak fundamentals in the US economy will likely put the US dollar under pressure.
When it comes to Jordan we took a non-consensus view in 2008 that growth in 2009 would halve, but remain positive. In our view this was a strong economic performance from Jordan, given our expectations that many economies in the Middle East and the West would face recessions. Monetary and fiscal policies have helped pick up the slack in the economy.
We are not concerned with the widening budget deficit in the short term. Budget deficits all over the world helped the global economy avoid the worse. But we view the wider deficit as a short term solution and it is important to have an exit strategy and a return to normality. The challenge for policymakers in Jordan and all over the world is to time the exit strategy. Too soon and the recovery will come to an end, too late and we can see inflationary expectations and interest rates rising.
http://www.zawya.com/story.cfm/sidZAWYA20091025090730
© The Star 2009
Marios Maratheftis - is an expert on the regional economy, FX strategy and financial markets. He has several years experience in emerging markets, having graduated from the University of Warwick with an MSc in Economics and Finance and a BSc in Economics.
He initially worked as an econometrician in his native Cyprus where he advised the Central Bank on foreign exchange related issues. Marios then took on the role of economist and Senior FX strategist with Standard Chartered Bank based in London, where he played an active role in the management of the Bank's FX Strategy real money portfolio. He has attracted a large following with the accuracy of his forecasts and his ability to give engaging presentations on a wide variety of financial issues.
He has authored a number of financial and academic articles, and appears regularly in the international media. His job has taken him across the Bank's franchises in Europe, Asia, Africa and the Middle East. Marios was promoted to the role of Regional Head of Research for the Middle East, North Africa and South Asia in 2007 and he is based in Dubai.
He will be a speaker @
4th LPGtrade Summit
09-11 Nov, 2009 - Doha
http://www.cmtevents.com/speakerprofiles.aspx?ev=091134&
