Global Economy Seen Weathering Shocks

Source : The Business Times, October 6, 2007

Asia except Japan will enjoy biggest growth: top banker

THE global economy faces six to nine months of turbulence but will weather it without a crash, says Kenneth Courtis, former managing director and vice-chairman of Goldman Sachs Asia.

Prof Courtis was speaking at CapitaLand's 10th international advisory panel meeting yesterday.

In the past, every time there has been a financial crisis the economic community has found a way to deal with the situation, he said. 'My sense is that we will find it again.'

Central banks will work to prevent a crisis by increasing the amount of liquidity in the market, Prof Courtis said. 'Central banks everywhere have been putting money on the table.'

In the United States, he expects interest rates to come down eventually to 3.5 per cent, which will help the economy weather the tough times.

Other central banks will take similar measures to help their economies, he said.

Asian economies except Japan will enjoy the biggest growth after the period of uncertainty, he believes. The US economy is not going to be 'exciting' going forward, while Europe has 'peaked'.

And Japan, according to Prof Courtis, will grow at a rate of just 1-1.5 per cent over the next few years. The rest of Asia is the 'big story', he said.

Similarly upbeat about Asia is Grant Kelley, chief executive of Colony Capital Asia, who also spoke at the event. He expects the region to draw more private equity money.

Right now, private equity deals as a percentage of GDP in Asia are just 0.5 per cent, he said. By comparison, in North America their value is 4.1 per cent of GDP.

The figure for Asia could grow eight-fold, said Mr Kelley, who reckons the global unrest could provide reputable companies and private equity firms with good opportunities over the next 18 months.