'Maltese recession mild compared to Eurozone' - HSBC expert

The HSBC expert was addressing a conference organised by HSBC Malta to present its views on the European economy and to highlight effective techniques for managing market risks.

Ward said that the bailout packages had lessened the risks of crisis contagion, although the fiscal challenge remains. She explained how Germany should benefit from a rebound in global trade, albeit this would not be enough to carry the entire region, and large divergences between countries would see interest rates staying low.

Ward also touched upon solutions that could enable countries to rise out of their debt problems, although she said there were limited options within a monetary union. She said the euro may need to remain at current exchange rate levels in order to restore the competitiveness within the Eurozone. “In fact, the weaker euro is already helping exports to grow, in particular Germany, although this needs to feed into higher consumption that should generate further growth,” she said.

HSBC’s Head of Business Development, Graham Newton said that a risk management strategy to manage the interest rate risk, should protect the borrower in difficult moments, provide benefits should rates remain low and be effective and transparent. Newton said his “preferred hedging option was to use interest rate caps which protect the borrower against a rise in rates.”