Europe – Facing a slowdown or a recession?

Malta’s economic outlook discussed at BOV Business Breakfast

The Clock is ticking for Europe – a slowdown or the risk of a recession was the theme of a business breakfast organised by Bank of Valletta in collaboration with Saxo Bank.

Keynote speaker Christopher Dembik, head of Macroeconomic Analysis at Saxo Bank clearly noted that the risk of a recession is on the increase. “Traditionally, a recession results from a hit on exports, that is already being witnessed while we luckily are not yet experiencing tightened domestic financial conditions,” said Dembik. “A possible trade war with the US and current political uncertainties, particularly the looming Brexit, are all contributors to a potential bleak economic environment.”

“Looking ahead, we are convinced that we are entering a new cycle that will be marked by weaker growth and rising political risk,” continued Dembik. “Possible elections in Greece, Austria and Italy, liquidity and the role of China are major themes that will be crucial to monitor throughout the year.”

After the speech, a discussion followed featuring Dembik, Giovanni Cachia, head Portfolio Management Services within BOV’s Wealth Management Arm and Steve Ellul, head BOV Asset Management, which panel was moderated by Mark Scicluna Bartoli, executive EU and Institutional Affairs at Bank of Valletta.

Taking a more local approach, Ellul noted how Malta has a very resilient economy which has always fared well in times of crisis. “The size of our economy allows us to be nimble and flexible in the face of external economic shocks and this has been proven in the past.”

Ellul also stressed on the importance of nurturing the reputation of our jurisdiction. “We have to promote and highlight the value proposition offered by Malta as a jurisdiction which is at the forefront in the financial sector, egaming and other innovation-oriented sectors.”

“High quality bonds have traditionally performed well in a low interest environment and we should seek investments that historically have been more resilient during an economic slowdown or a recession,” said Cachia. “Sector rotation is critical during these times; discretionary spending, such as leisure, cars and luxury products are the first to experience decreased spending in troubled times so investment should be channeled more towards essential items such as food and beverages and hygiene products that traditionally have performed relatively better, with gold a good consideration as a safe-haven asset.”

The business breakfast concluded with a live demo of the eTrader+, the online trading platform set up in collaboration between Bank of Valletta and Saxo Bank. The eTrader+ allows investors to trade in international markets and tap into Saxo’s macro econmists insights on future market trends.

For more information on how to access eTrader+ contact Bank of Valletta on +356 2131 2020; email: customercare@bov.com