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Banking & Finance

Standard Chartered offers insights on economic outlook

Released at: 07:57, 29/09/2019

Standard Chartered offers insights on economic outlook

Photo: Hong Nhung (VET)

Bank's recent Global Research Briefing in HCMC discusses economic outlook and technological trends.

by Khanh Chi

More than 150 senior leaders from local and foreign businesses gathered at the annual H2/2019 Global Research Briefing seminar held in Ho Chi Minh City recently, discussing trade tensions and the likely implications for rates and FX markets through to 2020, as well as cutting-edge insights on the latest technology trends.

Standard Chartered’s speakers at the event included Mr. Edward Lee, Chief Economist, ASEAN and South Asia, Mr. Divya Devesh, Head of ASEAN and South Asia FX Research, and Mr. Maxime De Guillebon, Member of SC Ventures, a platform and a catalyst for Standard Chartered to promote innovation, invest in disruptive financial technology, and explore alternative business models.

“Slowing growth, lower-than-expected inflation, and rising downside risks have caused central banks around the world to turn increasingly accommodative,” Mr. Nirukt Sapru, CEO Vietnam and ASEAN and South Asia Cluster Markets at Standard Chartered Bank, said in his welcoming remarks. “There are also some geopolitical risks to watch for. Everyone is aware of the US-China trade dispute and this is already affecting the global economy.”

“Additionally, recent tensions in the Middle East involving Saudi Arabia and Iran have been rising. Things look brighter in Asia, which we expect to lead global growth in the near future. All in all, it seems likely to be another positive year for Vietnam, so long as some key risks stay well-managed.”

Mr. Torry Berntsen, Standard Chartered’s CEO and Regional Head of Corporate and Institutional Banking, Americas, spoke about the bank’s operations in the Americas and its strength in supporting trade with Vietnam. Mr. Berntsen was in Vietnam as the first stop of an ASEAN tour to visit key markets and clients to ensure Standard Chartered is well positioned to support them in driving commerce and prosperity.

Mr. Lee kicked off the event by sharing his views on the latest global, regional, and local outlook. He forecast moderate global growth of 3.4 per cent in 2019, noting three broad factors determining headwinds or tailwinds: US trade tensions with major partners, the policy outlook for major central banks, and oil prices.

All three factors affect sentiment and economic activity, both in investment and consumption. Mr. Lee, however, was bullish about Vietnam’s outlook, which he believes will be an ASEAN outperformer in 2019 with GDP growth projected at 6.9 per cent and sustained through 2021.

He saw the recent broad-based 25bps rate cut rate cut by the State Bank of Vietnam (SBV) – the first since July 2017 – as pre-emptive signaling, given Vietnam’s dependence on global demand to support its export-driven growth. The near-term impact on credit growth and borrowing costs is likely to be minimal, as domestic liquidity is flush and overnight borrowing costs are close to yearly lows. He does not expect further monetary policy action from the SBV for the rest of 2019.

Mr. Devish discussed the outlook for foreign exchange and interest rate markets globally. Trade tensions are dominating market attention, and lower inflation outcomes are enabling major central banks to respond. He highlighted that aggressive monetary policy easing by global central banks are likely to keep interest rates at subdued levels. He also focused on the impact of trade wars on Asia FX, with a specific focus on the CNY and the VND.

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