The Middle East might come out of the recession caused by the novel coronavirus (COVID-19) pandemic later than some other parts of the world. However, many regional economies will continue diversification efforts, according to David Livingstone, CEO of Europe, Middle East and Africa (EMEA) at Citigroup.
Livingstone said that most experts expect a sharper recovery in the Middle East region in 2021, which is slowing down somewhat. Citi believes that the global recovery may also shift over time.
“I think digitalisation of financial services has big growth opportunities, and we anticipate the EMEA region will be a market leader in transaction services in treasury management, and we will continue to invest in these types of activities to achieve growth across the region,” Livingstone said.
He further noted, “We see differences in Africa, as the combination supporting international and local companies and sovereigns that balance in the present have been changed by COVID-19. We also see distinctions, because we do have local currency domestic balances raising deposits in domestic currencies which give local stability. I think this is an area we can continue to remain active in. Besides, I do not think that we will change target markets, but we will see changes in mature companies, and we will continue to look for opportunities.”
Livingstone also said that capital markets are for funding the needs of corporates, and the wholesale funding of corporate balance sheets, whether it is for its own capital expenditure or organic growth or to fund shareholder return.
He elaborated that the UK plans to lift its ban on non-essential travel to all EU destinations, British territories and other countries as regulations relating to the COVID-19 ease.
He explained that CitiBank has a team based in Saudi Arabia which is fully operational over a range of activities.
Livingstone added, “We are very active, and we are conscious about the potential step regarding Saudi banking licences. I think we are very positive that, post COVID-19, financial services in Saudi Arabia will participate very strongly.”
He noted that he does not believe that Saudi Arabia’s policymakers have resorted to austerity measures in response to the economic crisis resulting from pandemic lockdowns.
“I think that multinational engagement is the way forward, as can be seen in but the recent World Trade Organisation (WTO) in which bilateral free trade agreements between countries were brought to the fore,” Livingstone said, “Certainly, Brexit is likely to delay the UK’s building of relationships with the rest of the world. I do not think that a deflationary spiral is a real possibility, because it is a cornerstone of global central bank policies to control inflation.”
Mike Corbat, Citigroup CEO, said the economic recovery from the pandemic lockdowns will be uneven, and would depend to a great extent on the response from governments.
Corbat added that there have been some extraordinary actions undertaken by financial authorities around the world, not least the US. He noted that US financial markets had responded and were “encouraged by the resilience” of government policy.
“We cannot predict when the pandemic ends, unless health experts around the world announce a vaccine,” Corbat added. “I believe that the global financial crisis will affect the clients in terms of global growth rates. Looking at growth rates around the world from the emerging markets, these markets grew 6% prior to COVID-19, but developed markets grow at 4% pre-COVID-19. Many governments around the world struggled making fiscal adjustments to build their respective economies, and found it difficult to adjust their spending programmes.”
“There has also been an acceleration in digital, consumer business and institutional business as well as infrastructure due to COVID-19. We have moved forward to protect our customers by moving banking services online. Moreover, digital institutions continue to accelerate, and I think we can move the timeline forward to develop our commodities towards digitalisation. Government officials should accelerate technology as a reality, but there are significant fears in terms of jobs displacement,” he elaborated.
Corbat announced that Citi and the Citi Foundation have committed over $100m to date in support of COVID-19-related community relief and economic recovery efforts globally. This includes more than $35m in new funding, adding to the previously announced $65m in grants and charitable contributions to deliver ongoing relief and support for longer-term economic recovery in communities impacted by the global pandemic. These contributions include $2m from Citi employees through a donation-matching programme.