Global finance leaders hopeful for modest rebound in 2020

IMF Managing Director Kristalina Georgieva said trade tensions are ‘now taking a toll on business confidence and investment.’ (AFP)
Updated 19 October 2019

Global finance leaders hopeful for modest rebound in 2020

  • IMF projects global economy would expand by just 3 percent this year, the weakest showing in a decade
  • About 90 percent of the globe experiencing a downshift in growth this year, says lending organization

WASHINGTON: Global finance leaders agree that growth has slowed but they remain hopeful for a modest rebound next year as long as trade and geopolitical tensions do not worsen.
That was the assessment Friday from finance ministers and central bank governors of the Group of 20 major industrial countries.
Those officials met ahead of discussions Saturday with the policy-setting panels of the 189-nation International Monetary Fund and the its sister lending organization, the World Bank.
The leaders of those two organizations appealed to their member countries on Friday to resolve the widening disagreements on trade, climate change and other issues, warning that the continued diversions threatened to worsen the current global slowdown.
Japanese Finance Minister Taro Aso, the current chair of the G-20 finance group, said while current conditions are less than optimal, there was still optimism that conditions will improve.
Speaking to reporters at a news conference after the G-20 discussions ended, Aso said, “We broadly agreed that the global economic expansion continues, but its pace remains weak.”
Aso said the group felt that the risks remained weighted to the downside with the major threats coming from trade wars and geopolitical tensions. But he said the expectation was that growth would pick up in 2020.
Japan served as chair of the G-20 this year, a position that will be taken by Saudi Arabia in 2020.
The United States is represented at the meetings by Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell.
The IMF in its updated economic outlook prepared for this week’s meetings projected the global economy would expand by just 3 percent this year, the weakest showing in a decade, with 90 percent of the globe experiencing a downshift in growth this year. But it is forecasting growth will accelerate slightly to 3.4 percent in 2020, still below the 3.6 percent global growth seen in 2018.
“Trade tensions are now taking a toll on business confidence and investment,” IMF Managing Director Kristalina Georgieva said in an opening speech to finance officials on Friday.
Georgieva, a Bulgarian economist who had been the No. 2 official at the World Bank, recognized the accomplishments of her IMF predecessor, Christine Lagarde, the first woman to head that agency. Lagarde was in the audience for the speech.
“As someone who grew up behind the Iron Curtain, I could never have expected to lead the IMF,” Georgieva said. She noted she had witnessed the devastation of bad economic policies when her mother lost 98 percent of her life savings during a period of hyperinflation in the 1990s in Bulgaria.
World Bank President David Malpass said the slowdown in global growth was hurting efforts to help the 700 million people around the world living in extreme poverty, especially in nations trying to cope with a flood of refugees from regional conflicts.
“Many countries are facing fragility, conflict and violence, making development even more urgent and difficult,” he said.
The fall meetings of the IMF and World Bank meetings were expected to be dominated by the trade disputes triggered by the Trump administration’s get-tough policies aimed at lowering America’s huge trade deficits and boosting US manufacturing jobs. So far, those efforts have made little headway.
In addition to the battle between the United States and China, higher US tariffs went into effect Friday on $7.5 billion in European goods coming into the United States in a dispute involving airplane subsidies.
France’s finance minister, Bruno Le Maire, said China probably would be the real winner in the US-EU trade fight. He said the EU was ready to negotiate a settlement to avoid the tariffs but so far, the Trump administration has rejected those efforts.
“From the very beginning, we have made it very clear that we want to avoid a trade war,” Le Maire said. “The response from the US administration has always been a closed door.”
Georgieva said a tentative US-China trade agreement announced last week should lessen the damage to the global economy slightly, but solid global growth would not return until the two countries resolved their differences and all countries moved to modernize the rules of global trade to lessen future disputes.


Bank jobs go as HSBC and Emirates NBD reduce costs

Updated 15 November 2019

Bank jobs go as HSBC and Emirates NBD reduce costs

  • Others have also reduced headcount amid economic downturn and property market weakness

DUBAI: HSBC Holdings has laid off about 40 bankers in the UAE and Emirates NBD is cutting around 100 jobs, as banks in the Arab world’s second-biggest economy reduce costs.

The cuts come amid weak economic growth, especially in Dubai, which is suffering from a property downturn.

HSBC’s redundancies came after the London-based bank reported a sharp fall in earnings and warned of a costly restructuring, as interim CEO Noel Quinn seeks to tackle its problems head-on.

HSBC has about 3,000 staff in the UAE, part of a nearly 10,000-strong workforce in the Middle East, North Africa and Turkey.

The cuts at Dubai’s largest lender Emirates NBD came in consumer sales and liabilities, one source said, while a second played down the significance of the move.

HSBC and Emirates NBD declined to comment.

“The cuts are part of cost cutting and rationalizing to drive efficiencies in a challenging market,” the second source said.

Other banks have also reduced staff this year. UAE central bank data shows local banks laid off 446 people in the 12 months until the end of September. Foreign banks added staff in the same period.

Staff at local banks account for over 80 percent of the 35,518 banking employees in the country.

The merger between Abu Dhabi Commercial Bank, Union Commercial Bank and Al Hilal Bank saw hundreds of redundancies.

Commercial Bank International (CBI) said it would offer voluntary retirement to employees in September, which sources said saw over 100 departures. Standard Chartered, too, cut over 100 jobs in the UAE in September.

Rating agency Fitch warned in September a weakening property market would put more pressure on the UAE’s banking sector.