Risks to the global economy
RT:What do you see as the major risks to the global economy right now?
SB: “That’s a broad question. I would say that a big risk is that this double digit growth in China, which has continued for a decade, or two decades, would stop.Probably if you want the single largest risk, that’s probably it.And a decrease in the growth rate and growth expectations for China, would have repercussions on Asian economies, Australia and the U.S. because of China’s investment profile, and on the world economy because China is a big player, a big consumer of a lot of resources and exports from China.So probably, for social reasons of imbalance, with credit and capital allocations in China, that’s probably the biggest.”
RT: Standard and Poor’s recently downgraded Japan’s credit rating, which sent a shock through stock markets.Are you going to review any other countries in the near future?
SB: “We did do the revision of Japan.It might have shocked the stock market but it really was the result of some very slow moving trends and demographics and in the economic structure and production, that are actually present in European countries.As far as the reviews, we review continually credit, the credit profiles of all entities that have credit ratings, and we also put some on watch – watch positive or watch negative – if there are some factors which are here and now type factors which will lead to a change in the credit profile.We have Ireland on credit watch negative for example.So we will be reviewing Ireland over the next couple of months.And there is things going on with respect to negotiations and some plans being put into place to support the banking system in Ireland, that we’ll look at in order to take a decision there.And they are not the least.We have some credit watch and other actions in the middle east, and that will continue, with the social upheaval which can change in a material way, the credit profile of the country.So we’ll be looking at Tunisia, Egypt, maybe some other countries in the middle-east as well.”
RT: How does Russia’s rating stand, and what is the outlook right now? What risks do you see?
SB: “Russia has a BBB credit rating.It’s the lower part of investment grade.There is a stable outlook on Russia, and its been there for a couple of years I believe, and the stable outlook means that over the short to medium term you don’t expect that the credit profile will change, and we don’t expect that our credit rating will change in Russia.There is maybe slower moving issues for Russia also, with respect to the institutional infrastructure which would be, would come into play as far as a positive or negative influence on the rating. We will be looking at those types of issues.”