BY MOHAMMAD SHOEB
DOHA: The world is changing to become multi-polar once again. China is becoming more and more dominant country and economy, so is its currency. Yuan, popularly known as renminbi (RMB) is now an irreversible trend and emerging as global reserve currency, Marios Maratheftis, Global Head of Macro Research at Standard Chartered Bank (SCB), said in a media briefing here yesterday.
“There has been an explosion in the usage of RMB in trade settlements, deposits and currency transactions. The globalisation of the currency is up by over 60 percent,” he said.
Maratheftis said it is not only that China’s gross domestic product is expected to surpass the US GDP. The per capita income in China will also go up from the current $4,000 to $24, 000 by 2035 in real terms.
However, he pointed out that like other economies, China also suffers with its own limitations, such as it is not a well balanced economy. The socio-economic and environmental factors such as unemployment, income disparity, availability of clean water are major production constraints.
“Due to environmental concerns, China is moving to use more and more of gas and less coal which again has great relevance for countries like Qatar,” said Maratheftis.
He also said that Qatar has the potential and prerequisites to lead the GCC in building a well functioning local currency debt instrument to avoid the need of having a vibrant bond market on the same pattern Singapore has done.
“It is good that Qatar has started diversifying its economy and growing rapidly. Qatar can also lead the GCC and build a local currency capital market so that it can borrow in its own currency like Singapore. Singapore does not have a vibrant bond market in local currency for financing projects. It makes easier for corporate to raise capital in local currency. This is not the case in GCC anywhere. The only country that has a decent size local currency debt market is Egypt. Since Egypt could borrow in Egyptian pound, this is why it did not capitulate in the crisis despite the wide range of problems the economy is struggling with,” he said.
He anticipated that the double digit growth that Qatar registered for several years is unlikely to happen now because the growth will be driven by real economy not by gas production.
“Qatar has started diversifying its economy and growing rapidly, but no where it has yet finished. The 2022 Fifa World Cup will work as a catalyst for more investments in the economy. There may not be a double digit growth, but it is indeed a better quality and sustainable growth,” Maratheftis said.
On the global macro-economic outlook, he said that the world is transforming very rapidly, and the old models of growth and development are now obsolete. “As the West is deleveraging, Asia is increasingly relying on regional drivers of growth, China and Asia is now looking to rebalance their economies. There are risks, especially when it comes to politics and policy. But the world is growing, and growth in 2013 will probably exceed 2012’s,” he said.
Maratheftis, and other members of Standard Chartered’s Global Research team including Samiran Chakraborty, Head of Research, India, SCB; Shady Shaher and Sayem Ali, Senior Economists at SCB, were here to provide an in-depth insight and analysis on the global, regional, and local economic outlook as well as the financial picture for the year ahead. Charles Carlson, CEO of SCB, Qatar, was also present.
The Peninsula
