<p style="text-align: left;"><strong>By: Standard Chartered</strong></p>

<h2><b><span lang="EN-GB">Global Focus – Q3 2019</span></b></h2>

<p class="m_-6550391738124792153m_-8781471848120853542FactSetNormal"><span lang="EN-GB">Standard Chartered introduced this theme - slowing growth, lower-than-expected inflation and rising downside risks causing central banks to turn increasingly accommodative – in its Q2 look ahead and it has only strengthened since. The Bank does not, however, envisage a major slowdown as a series of policy responses are likely to avoid this happening.<u></u><u></u></span></p>

<h3 class="m_-6550391738124792153m_-8781471848120853542FactSetNormal"><span lang="EN-GB">Q3’s look ahead highlights:<u></u><u></u></span></h3>

<p class="m_-6550391738124792153m_-8781471848120853542FactSetNormal"><b><span lang="EN-GB">China:</span></b><span lang="EN-GB"> China’s economy faces significant headwinds, including slowing industrial profit growth, the ongoing US-China trade dispute and moderating external demand. Despite these challenges, growth expectations remain steady in H2, propelled by pro-growth policies and a resilient consumer market. On the trade front, talks with the US have restarted, but even if a deal is reached, the pattern of unpredictable developments is likely to persist as the 2020 US presidential election approaches.<u></u><u></u></span></p>

<p class="m_-6550391738124792153m_-8781471848120853542FactSetNormal"><b><span lang="EN-GB">ASEAN:</span></b><span lang="EN-GB"> Trade tensions between the US and China have affected investment sentiment and export performance across the region. Growth, however, is supported by domestic demand and labour markets remain largely healthy. Inflationary pressures are low, and with major central banks (including the Fed) now set to ease policy, ASEAN central banks should turn more dovish.<u></u><u></u></span></p>

<p class="m_-6550391738124792153m_-8781471848120853542FactSetNormal"><b><span lang="EN-GB">India:</span></b><span lang="EN-GB"> A convincing victory for the ruling party in the recent national elections has lowered political uncertainty. The fading of election-related uncertainty, fiscal stimulus and a favourable base effect should help GDP growth pick up to 7.0% in FY20. Slowing global growth, however, along with liquidity and solvency concerns at non-banking financial companies is likely to keep the recovery tepid. Another 25bps rate cut from the Reserve Bank of India in August is expected, to support growth.<u></u><u></u></span></p>

<p class="m_-6550391738124792153m_-8781471848120853542FactSetNormal"><b><span lang="EN-GB">US:</span></b><span lang="EN-GB"> The US economy is on a solid footing but faces mounting risks from trade tensions; a 25bps cut in the federal funds target rate is expected in July and a second 25bps cut in December. Politics and foreign policy remain uncertain and more clarity on the potential 2020 presidential election outcome should emerge when the field of Democratic candidates narrows from the current record number – likely by spring 2020.<u></u><u></u></span></p>

<p class="m_-6550391738124792153m_-8781471848120853542FactSetNormal"><b><span lang="EN-GB">Europe:</span></b><span lang="EN-GB"> Concerns about the euro-area outlook are growing, with trade uncertainty weighing on business sentiment. European Central Bank policy is expected to ease in the face of low inflation and growth concerns. The outlook for the UK will continue to be shaped by the Brexit calendar. The Conservative Party leadership election has raised the risks of a ‘no-deal’ Brexit by year-end and/or an early general election. The Bank of England should keep interest rates on hold, but risks of a cut triggered by a no-deal Brexit have risen.<u></u><u></u></span></p>

<p class="m_-6550391738124792153m_-8781471848120853542FactSetNormal"><b><span lang="EN-GB">Africa: </span></b><span lang="EN-GB">The region’s largest economies (Nigeria, South Africa and Angola) should continue to recover in the coming years following recent weak growth. A more dovish Fed will create room for further policy easing in the Sub-Saharan Africa (SSA) region while providing a reprieve from pressure on local currencies. Nigeria, benefiting from higher oil prices and a stabilisation of its FX reserves, already started to ease in March 2019. More central banks are expected to follow with easing cycles and/or an extended pause in policy rates.<u></u><u></u></span></p>

<p class="m_-6550391738124792153m_-8781471848120853542FactSetNormal"><b><span lang="EN-GB">MENAP: </span></b><span lang="EN-GB">Near-term growth prospects have weakened. The Bank’s 2019 GDP growth forecasts for the Middle East, North Africa and Pakistan (MENAP) region are lowered to 1.6% from 2.5%. For oil exporters, the extension of OPEC+ crude output cuts into H2 is the key negative; for oil importers Turkey and Pakistan, the continued need for stabilisation measures is likely to weigh on growth. Rate cuts are expected in Egypt and Turkey, and further hikes in Pakistan.<u></u><u></u></span></p>

<p class="m_-6550391738124792153m_-8781471848120853542FactSetNormal"><span lang="EN-GB">David Mann, Global Chief Economist, commented: “We see three broad factors determining headwinds or tailwinds for global growth: (1) US trade tensions with major partners, (2) the policy outlook for major central banks, and (3) oil prices. All three factors affect sentiment and economic activity, both investment and consumption. Trade tensions are dominating market attention, and lower inflation outcomes are enabling major central banks to respond, which we believe they will do to avoid a potential slowdown.”</span></p>