The S&P Global Market Intelligence forum, A Resilient APAC: Recovery, Risk, and Rebalancing, at the Sydney Harbour Marriott Hotel at Circular Quay on May 23 will cover an enormous range of issues.
These include the global banking turmoil, forensic accounting in credit risk, the increasing focus on mandatory sustainability disclosure, the what, how and why of climate-related risk stress testing, and future proofing your third party risk management strategy.
All of these will be covered on the day in the main presentations as well as the break out sessions..
But the main focus will be the opening address from Rajiv Biswas, the APAC Chief Economist at S&P Global Market Intelligence. He will focus on the macro-economic outlook for 2023-24.
Biswas said the global economy in May 2023 is now in a different and more positive space than it was at the end of last year when there were fears of recession in the US and Eurozone and China’s economy was facing uncertainty as it was emerging from its COVID restrictions.
“We are expecting modest positive growth the US and Eurozone this calendar year,” Biswas told Banking DayHe forecast growth of 1.2% for the US and just below 1% in the Eurozone. Modest but still positive growth
For the US, one of its big strengths is its labour market with low unemployment and good wages growth. At the same time, energy prices are coming down.
Similarly in Europe, there is an improved outlook for business and consumers with falls in gas and energy prices. Indeed, the S&P Global Purchasing Managers’ Index for the Eurozone service sector came in at a healthy 56.2 in April.
S&P Global Market Intelligence data also shows a rebound in tourism globally, and good global figures for transport and in software and services.
However, Biswas said the US is still facing headwinds from the Fed raising interest rates.
“We think they are close to the end of the tightening cycle,” he said
However, he pointed out the Fed had raised interest rates by 500 basis points since March 2022, and this had had a negative impact on residential building and will continue to have an impact on business fixed investment spending.
The picture, he said, was different for the Asia-Pacific. China accounts for half of the APAC region’s GDP. Last year, China grew by a weak 3%. This year, it is forecast to grow at 5.3%. This will take the Asia-Pacific growth from 3.2% to 4.1% this year.
Biswas forecast that global world growth will be 2.3% in 2023, compared to 3% last year, largely because of the headwinds of interest rates in the US and Eurozone.
“The outlook is still for expansion in the global economy this year,” he said
Biswas also pointed out that different countries in the Asia-Pacific are growing at different rates. He forecast that Australia will grow at 1.4% this year, compared to 3.7% last year. The outlook for Australia’s growth in 2023 has been affected by interest rates and inflation.
He said the external environment for Australia was favourable with high commodity prices having contributed to a cumulative 12-monthly trade surplus of AUD$151 billion by March 2023
More importantly, he forecast that the economic weight of the Asia Pacific will continue to increase, accounting for 40% of world GDP by 2030 compared with 27% in 2000. Much of this will be driven by China.
In the decade ahead, the Asia-Pacific will account for 57% of the increase in world GDP, mainly driven by China, India and ASEAN.
Outside of China, he said Australia has considerable export opportunities in India, which he forecast will become the world’s third largest economyby 2030. Biswas also expects that the ASEAN region will be a rapidly growing market for Australian exports, notably in Indonesia, Malaysia, Vietnam and the Philippines.