‘World heads for a soft landing’

The world economy could be headed for a soft landing, instead of a full-blown recession, despite the rising interest rates and oil prices, because the economy had factored in high oil prices, Clive Standish, chief financial officer of UBS AG, one of the largest financial services group in the world said on Monday.

Speaking to this newspaper, Mr Standish said the global economy could have a "hard landing" if the oil prices crossed the psychological barrier of US $100 per barrel. "The price of US $79 per barrel hasn’t stopped growth because there is enough buoyancy in the economy. That could change if oil crosses the $100 mark, because that will fuel inflation," he said.

Mr Standish said with interest rates rising in the United States, India could also witness an interest rate rise of between 25-50 basis points in the next two quarters.

However, he added that UBS, which has had a equity research operation in India since 1990, was bullish about the economic prospects of India. "We are here for the long-term, because we believe that India, along with China, Russia and Brazil, are the emerging markets to watch for long-term growth. In India, the demographics are right for investment banking and wealth management," he said. UBS had been investing substantially in China, where it acquired a stake in the Bank of China and has management control in Beijing Securities, and in Brazil, where it acquired a bank. Mr Standish said cross-border acquisitions by Indian companies is expected to increase.

Mr Standish said UBS planned to open its bank in India. "We have applied to the Reserve Bank of India for a banking licence, and it is being processed," he said. The bank would offer full-fledged services. He said UBS was also hiring students from IITs and IIMs for jobs as trainees and internees, who get an opportunity to work in various UBS operations in Hongkong, Switzerland and elsewhere.