Monday, January 25, 2021
Martin Hennecke

First world to lead recovery amid vaccine rollout
Investment houses are becoming more optimistic on an economic recovery, with Invesco forecasting that developed economies will turn the corner more rapidly than what was witnessed in previous recessions. And two of Hong Kong's note-issuing banks expect GDP to grow by about 4 percent this year. John Greenwood, chief economist of Invesco, forecasts that developed countries will experience a significant rebound in the second half with adequate supplies of Covid vaccines. He also projects China's economy will grow 7.5 percent this year. The country will not experience a cyclical credit-driven boom akin to 2016-17, he said, but rather it will continue to return slowly to trend growth. Greenwood sees Hong Kong's GDP rising by 3-4 percent this year. He also said the linked exchange rate system will not be changed as "it has worked extremely well for Hong Kong." And talking at the Asian Financial Forum yesterday, Mary Huen Wai-yi, chief executive of Standard Chartered Bank (Hong Kong), said the SAR's economy can be expected to grow by about 4 percent, underpinned by China's growth and a low interest rate environment in the United States. For its part, HSBC (0005) expects Hong Kong's economy to expand by 4.4 percent this year. But accountancy firm Ernst & Young forecasts that Hong Kong will book a record HK$363-billion deficit this fiscal year. Also on the somber side, Bloomberg reports that World Bank chief economist Carmen Reinhart is worried the protracted nature of the Covid-19 pandemic may overwhelm household and business balance sheets and develop into another financial crisis.

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