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Wednesday, October 20, 2021
15

The Crisis is a Social Crisis and Generating Positive Reflection of Enhancing
Human Dignity and Drive Towards Moral and Ethical Global Governance


Mr. R. Seetharaman, Doha Bank Group CEO participated in the Washington College’s CEO Leadership Series in Chestertown, Maryland on 8th Feb 2012 and spoke on “New World Order and Opportunities -Bilateral in terms of trade, Investments, Banking and Finance between USA and GCC”. Mr. Seetharaman highlighted how the current global crisis impacted the global economies and human lives. He said “This crisis is a social crisis and not just a financial crisis. As a result, of financial innovation, new business models of banks emerged which changed the underlying economics of banking as new financial instruments enabled credit risk to be shifted away from the originators of loans. However, securitisation also changed the nature of risks and, in particular, transformed credit risk into liquidity risk, then into a funding risk, and ultimately into a solvency risk"


  
 

Mr. Seetharaman gave his opinion on the Global economic Scenario. He said "According to IMF’s recent forecast the world output is going to be only 3.3% in 2012. We saw divergence in monetary and fiscal policy contributing to the current European crisis. We also witnessed US and France losing its AAA rating in the last one year. The new world order will witness emerging economies continuing to drive growth in the global economies. The global regulatory architecture will also get realigned. The realignment of global architecture will support the achievement of the millennium goal of “Develop further an open, rule-based, predictable, non-discriminatory trading and financial system” There will be increased risk of recession in the current global scenario and the world needs to deleverage. The Financial Economies mainly the G7 countries have huge debt and they should have a fiscal discipline to come out of crisis. The financial economies have to convert to real economies. In emerging and developing economies, near-term policy should focus on responding to moderating domestic growth and to slowing external demand from advanced economies.”

Mr. Seetharaman emphasized the role of US in global scenario. He said” The recent data shows US unemployment is at 8.3% and coupled with recent trends in manufacturing and consumer confidence the recovery chances have improved. However the risks highlighted by US Fed Reserve should also be considered. U.S. trade is expected to rise to $4.4 trillion, up 62.3 percent, in the next 15 years as long-term commodity demand continues and highly competitive. World trade volumes to grow by 73 percent by 2025. China is expected to remain the U.S.'s most important trading partner until at least 2025. The US is the most open and liberal economy in the world and foreign trade and direct investment is a net positive for both GCC and US”

Mr. Seetharaman explained the key trends which shaped the Global Banking industry. He said “The Changing trends in Business and Technology have resulted in a new competitive landscape in the globe. The key changing business trends includes a seamless world new cost structures and excess capacity. The changing technology trends include new distribution channels through internet, increasing rate of change in technology and Outsourced processing. The new competitive landscape provides better capacity utilisation, reduce processing costs, flexibility to meet changes and provide overall value to customers. The key reasons for these changing trends include Globalisation, Consumerism, Technology and the new regulatory realignment”

Mr. Seetharaman gave his economic outlook on regional economies. He said “The GCC states constitute one economic entity, and are considered among the major trade partners of the United States for hydrocarbons. The GCC economies as a single block have similar macro economic composition and increased degree of Openness in investment, trade, commerce policies. There is rapid capital formation with modernization and creation of infrastructure. GCC Economies are more resilient to the crisis due to measures taken by Government and regulators. The GDP percapita is highest amongst ranking countries.GCC economies can witness a growth of 4-5% in 2012. GCC economies have huge fiscal surplus, investable surplus and the current account surplus due to hydrocarbon exports. The Budgets of Saudi Arabia and Oman are based on much higher oil price when compared to 2011 and thrust is given to the infrastructure sector.”

Mr. Seetharaman gave his economic outlook on Qatar and major opportunities in Qatar. He said “Qatar's economic growth is expected to slow down sharply to 5.1 percent in 2012, from a projected 15 percent for 2011 as the country's decades-long gas expansion programme winds down. In 2012 and beyond growth will depend on non- hydrocarbon economy in line with Qatar National Development Strategy .Qatar National Strategy execution is based on. Qatar’s National Vision 2030 which has also considered environment development as one of the pillars of its vision. The environment development will also support the millennium goal of “Ensure environmental sustainability “. The current account surplus in 2011 and 2012 will be above 20% of nominal GDP. Qatar will post a double digit fiscal surplus in 2011 of 12.6% in 2011 and another larger surplus in 2012.The Qatar exchange has increased time last year for global investors and plans to introduce new products such as bonds. In 2011, QE is connected to SFTI (Secure Financial Transaction Infrastructure), a worldwide network that connects banks and brokers across the world to exchanges in Europe and the US. The projects in Qatar currently are worth more than $100bn.”

Mr. Seetharaman highlighted the bilateral trends between US and GCC. He said “ There are many areas where mutual strengths can be leveraged to increase co-operation such as trade ,finance and investment The total trade between GCC and US has increased from 71.1 Billion from 2010 to 89 Billion for the 11 months ended Nov 2011.The increase in bilateral trade was mainly due to increase. In exports from all GCC countries which had picked up in 2011 over 2010 due to higher oil price. The United States is exploring the development of a Trade and Investment Cooperation Agreement with the GCC nations as a whole. US investment in Qatar is expected to exceed $8B and is mainly in oil and gas sector. In June 2011 Qatar airways and Boeing announced order for 6 Boeing 777 Airplanes amounting to $1.7B.In April 2011 USA and the State of Qatar signed a Memorandum of Understanding (MOU) regarding Cooperation to Enhance Global Food Security. Qatar Science and Technology Park (QSTP) opened in March 2011 in which chevron invest up to $20m for solar test facility.US Department of Energy( DOE ) and Qatar Science and Technology Park (QSTP) signed MOU in April 2011 to explore energy efficiency, carbon capture and Solar technology. US companies evoke interest in Saudi property sector.”

Mr. Seetharaman gave his insights on the current trends in financial markets. He said “The year 2012 saw the global capital markets rising on account of optimism mainly from US, Germany and China. The markets are still watching the Greece crisis for which a solution is yet to be arrived. The recent move by Federal Reserve to keep rates up till 2014 has given a boost to commodities namely gold, silver and other commodity related sectors. The US and emerging economies capital markets can provide excellent opportunities for long term investors. The dollar which was rising till end of 2011 dropped after the U.S fed move. Currency markets will continue to fluctuate due to the crisis in advanced economies. The GCC region’s bond yields are going up due to euro crisis and many players in GCC are planning to raise funds for refinancing which provides excellent opportunities for global bond investors. There is also potential in Asian bond market and US property Market”

In his concluding remarks, Mr. Seetharaman said “This crisis is a social crisis and generating positive reflection of enhancing human dignity and drive towards moral and ethical global governance.”

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