HSBC chief predicts cooling of US economy
While Chief US Economist for HSBC Securities (USA) Incorporated Ian Morris is expecting the US economy to slowdown in 2007, Bank of Bermuda CEO Phil Butterfield said yesterday that Bermuda?s challenge is to sustain the growth of the reinsurance sector.
?I believe our economy here is relatively strong, however, we do have a number of challenges,? Mr. Butterfield said.
?When you look at the reinsurance sector we have to be very careful in planning how that sector continues its historical growth rate.
?We are constrained with regards to physical space, we are constrained with resources in investment in that sector so there is work to be done to figure out a path to positive growth.
?I think there are options available to us, but we need to get to work fairly quickly to have an orderly way forward. I am not expecting, in the near term, for there to be any adverse impact on Bermuda but our challenge is a long term challenge.?
Mr. Morris presented HSBC?s outlook for the US economy in 2007 at a seminar held at the Fairmont Hamilton.
Mr. Morris was in Bermuda to host a presentation for senior Bank of Bermuda managers and bank clients on US economic challenges.
?In the view of HSBC we feel the US economy is going through an adjustment process,? he said. ?It has being enjoying, for a number of years, a housing boom which is now in the process of reversing.
?There have been a broad range of housing indicators that have been on the decline for some time now but, in recent months, the decline has accelerated.?
Mr. Morris said it may a year or more before the housing decline bottoms out and see some some stability return.
?We think the housing impact on the rest of the economy will have a reasonable spill over effect which will result in slower consumption in the US as result of the wealth effect of housing beginning to wane.
?We see the US economy slowing down from about 3.5 percent this year to 1.5 percent next year. The good news is that its not an outright recession or outright hard landing but it?s a bit of a bumpy landing.?
