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5 August 2013

Economics US

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Global Research

US Economic Outlook
Lower 2013 growth forecast on slow start to year
New data show 2013 got off to a slower start than previously estimated; the slow start lowers our forecast for 2013 GDP growth to 1.5% from 1.8% Our 2.4% GDP forecast for 2014 is unchanged Our expectation for weak growth in the near term means we do not expect the FOMC to start QE tapering until December
Extensive revisions to historical US GDP data show the average growth rate from the end of the recession to the first quarter of 2013 is now estimated at 2.2%, compared to 2.1% previously. This increase in measured output is not enough to change our views on the growth of potential GDP or on how much slack currently exists in the economy. The revised GDP data do have an impact on our forecast for the growth of GDP this year. The new data show a slower rate of growth than before for Q4 2012 and Q1 2013. That means 2013 got off to a much slower start than previously estimated, and that the average level of GDP over the four quarters of 2013 will likely be lower than we previously forecast. In late June we estimated a 1.8% increase in the average level of GDP in 2013 compared to 2012. With the revised data in hand, that estimate falls to 1.5%. Our forecast for growth in 2014 is unchanged at 2.4%. On a Q4 to Q4 basis our forecast for 2103 GDP growth is only slightly changed, down to 1.9% from 2.0%. For 2014, the Q4/Q4 forecast remains the same at 2.5%. A slowdown in business investment has hampered the growth of GDP in the past year. We expect a pickup in investment spending in the year ahead. However, there is a risk that concerns over fiscal drag and slow growth in the global economy could temper investment plans by many businesses. Consumers seem to have settled into a steady 2.0% growth track and are unlikely to create a serious drag on economic growth in the year ahead. But business spending is more of a wild card. Sluggishness in investment spending could curtail GDP growth in the year ahead. Given all the uncertainties that exist regarding both the economys near-term growth prospects and the outlook for fiscal policy, we continue to believe that the FOMC will hold policy steady at its next meeting in September. A decision to taper QE, in our view, is more likely to come at the December FOMC meeting.

Kevin Logan Chief US Economist HSBC Securities (USA) Inc. +1 212 525 3195 kevin.r.logan@us.hsbc.com Ryan Wang Economist HSBC Securities (USA) Inc. +1 212 525 3181 ryan.wang@us.hsbc.com

View HSBC Global Research at: http://www.research.hsbc.com

Issuer of report: HSBC Securities (USA) Inc

Disclaimer & Disclosures This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it

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New data, same trend


New GDP data confirm lackluster growth
On 31 July, the Bureau of Economic Analysis released a comprehensive revision of GDP data going all the way back to 1929. The level of GDP was raised as spending on research and development was re-classified as a capital expenditure rather than as an input into production. The development of entertainment and artistic originals was also classified as fixed capital since many of these goods continue to produce revenue for their creators, just as a piece of capital machinery might for a manufacturing firm. While these changes may help statisticians better measure what is actually going on in the economy, they do little to settle any of the debates that are currently important to financial markets. Investors are interested in GDP data as a guide to the economys potential output, whether current production is close to that potential and, if not, how fast is the economy growing toward that potential level. On this score, the new data change perceptions only slightly. The new data show that quarterly GDP growth averaged 3.43% from 1947 to 2007. The quarterly data start in 1947, and 2007 marks the start of the recent financial crisis. The old data showed a 3.38% growth rate. In other words, there is no significant difference. More things are being measured as part of GDP, but the growth rate of these new items has been only fractionally faster than the rate of growth of the rest of the economy. The same conclusion can be reached even when the GDP data are broken up into shorter periods in order to see whether there has been any change in the historical pattern of GDP growth. The measured growth of GDP is nearly identical with both the old and new data for each of the three 20 year periods from 1947 to 2007. Growth averages 4.1% in the first 20 years, slips to 3.2% for the next 20 years, and then to 3.1%.

Table 1. HSBC US economic forecasts (if changed, previous months forecast in parentheses) ____Actual____ Q1 13 Q2 13 Gross Domestic Product (% quarter annualized) Final Sales to Domestic Purchasers Personal Consumption Business Fixed Investment Residential Construction Government Purchases Net Exports (ppt contribution to GDP) Inventory Change (ppt contribution to GDP) Industrial Production (% quarter annualized) Unemployment Rate (average) GDP Price index (% quarter annualized) Consumer Price Index (% year-on-year) Core Consumer Price Index, (% year-on-year) Federal Budget Balance (FY), USDbn as a % of nominal GDP Current Account Balance, USDbn (average) as a % of nominal GDP
Source: HSBC

__________Projected__________ Q3 13 Q4 13 Q1 14 Q2 14 2.0 (1.9) 2.6 (2.5) 2.3 (2.5) 2.1 2.4 2.2 1.7 5.0 15.0 -0.4 0.3 -0.4 2.6 7.4 2.4 1.7 1.8 2.0 5.9 12.0 -0.4 0.1 0.0 2.1 7.3 1.8 1.7 1.9 2.0 5.5 10.0 -0.8 0.1 0.0 3.1 7.2 1.8 1.8 1.8 2.5 2.4 2.1 5.9 12.0 -0.8 0.1 0.0 3.5 7.0 1.8 2.2 1.9

___Q4/Q4 % change___ 2012 2013 2014 2.0 1.9 (2.0) 2.1 1.7 2.0 5.0 15.5 -1.1 0.3 -0.5 2.8 1.9 2.6 13.2 -1.4 -0.1 0.2 2.4 2.5 2.3 2.1 5.7 11.0 -0.8 0.1 0.0 3.3

_Annual avg % change_ 2012 2013 2014 2.8 1.5 (1.8) 2.4 1.6 2.2 7.3 12.9 -1.0 0.1 0.2 3.6 8.1 1.9 2.7 14.1 -2.0 0.0 -0.1 2.3 7.5 1.5 1.6 1.8 -647 -3.9 -424 -2.5 2.4 2.3 2.0 5.6 11.7 -0.6 0.1 0.0 2.8 7.0 1.8 1.9 1.8 -600 -3.6 -400 -2.3

1.1 0.5 2.3 -4.6 12.5 -4.2 -0.3 0.9 4.3 7.7 1.3 1.7 1.9

1.7 2.0 1.8 4.6 13.4 -0.4 -0.7 0.4 0.5 7.6 0.7 1.4 1.7

1.8 1.9 1.9

1.6 1.7 1.9

1.9 1.8 1.7

1.7 2.1 2.1 -1089 -6.8 -440 -2.7

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Though the longer-term growth rates were little changed by the revisions, there were some noticeable changes regarding recent growth in economic activity (Figure 1). Quarterly growth rates since the end of the last recession in the second quarter of 2009 are now seen as a bit more volatile, and on average were slightly stronger than then previously measured. The average growth rate from the end of the recession to the first quarter of 2013 is now estimated at 2.2%, compared to 2.1% previously. One can be glad that a bit more output was produced, but this slight increase in measured production does not change our views on the growth of potential GDP or on how much slack currently exists in the economy.
Figure 1. Revised GDP data does little to change the pattern of growth
9.0%

Average Q2 '09 to Q2 '13 = 2.2%


6.0%

New
3.0%

0.0%

-3.0%

Average 1947 to 2007 = 3.4%


-6.0%

Old

-9.0% 97
Source: BEA

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Slightly faster growth, slightly lower inflation


With respect to how much slack is in the economy, its worth noting that the measurement of inflation dropped slightly for the past few years. According to the newly revised data, the GDP price index -- the most comprehensive measure of the average level of prices -- rose at a 1.6% annual rate from the end of the recession through the first quarter of this year. That compares with a 1.7% rate as measured under the old system. It is obviously not much of a difference, but it does mean that the slightly faster rate of GDP growth since 2009, as now measured, does not appear to be closing the gap between the current level of output and the economys potential level. If it were, then there would be a tendency for inflation to be moving higher rather than lower. Since the new GDP data suggest that a large output gap still persists, downward pressure on inflation may continue in the near term. Over the past four quarters, inflation as measured by the GDP price index has dropped to 1.4%, down from 1.7% in the second quarter of 2012 (see Figure 2). Meanwhile, the slowdown in the Federal Reserves preferred measure of inflation, the core PCE price index, has been a bit more pronounced, down from 1.9% a year ago to only 1.2% in the second quarter this year (see Figure 3).

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Figure 2. Revised GDP data show inflation moving lower


4.0% GDP price index, YoY%

Figure 3. Core PCE inflation well below the Feds 2.0% target
2.5% Core PCE, YoY%

3.0%

2.0%

2.0%

1.5%

1.0%

1.0%

0.0% 05
Source: BEA

0.5% 06 07 08 09 10 11 12 13 05
Source: BEA

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Near-term growth outlook


The revised GDP data do have an impact on our forecast for the growth of GDP this year, though the change is mostly technical. The new data show a slower rate of growth than before for Q4 2012 and Q1 2013. That means 2013 gets off to a much slower start than previously estimated, and that the average level of GDP over the four quarters of 2013 will likely be lowered than we previously forecast. In late June we estimated a 1.8% increase in the average level of GDP in 2013 compared to 2012. With the revised data in hand, that estimate falls to 1.5%. Our forecast for growth in 2014 is unchanged at 2.4%. On a Q4 to Q4 basis our forecast for 2013 GDP growth is only slightly changed, down to 1.9% from 2.0%. For 2014, the forecast remains the same at 2.5%.

Consumer spending resilient


GDP grew at an average 1.4% annualized rate in the first half of 2013, half the average 2.8% rate posted for all of 2012. Somewhat surprisingly, the slowdown was not due to a cutback in the growth of spending by consumers. Federal taxes were increased this year, with the temporary two percentage point reduction in the payroll tax rate coming to an end, and with income tax rates being increased on high-income earners. Despite that, consumer spending rose at an average 2.0% rate in the first half of this year, the same as the average growth rate in 2012 (see Table 1 on page 2 for details of our GDP forecast). Consumer finances have gotten some support from lower interest rates in the past year. For homeowners in particular, the opportunity to re-finance mortgages at lower interest rates has pulled down the ratio of debt-service payments to disposable income. Rising house prices have reduced the number of homeowners who are underwater on their mortgages, enabling more people to qualify for re-financing. In addition, rising house prices can increase consumer confidence and reduce the demand for precautionary savings.

Economics US 5 August 2013

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On top of that, the increase in average stock prices in the past year has led to a strong improvement in household balance sheets, at least in the aggregate. In the first quarter of this year, the value of direct equity holdings and mutual fund shares held by households reached a new peak, finally surpassing the last peak valuation level seen in 2007. All of these developments have probably helped to offset the adverse effects of higher tax rates in the first half of this year. Still, these positive financial developments were not enough to lift the growth of consumer spending to a higher level. Despite modest quarterly gyrations, the trend in consumer spending has not changed very much since the end of the recession in the second quarter of 2009. Since that time, consumer spending has grown at a 2.2% rate and has not shown any sign of accelerating off that subdued pace (see Figure 4).
Figure 4. Consumer spending stuck in a slower growth track compared to pre-crisis trend
11.7
Real personal consumption expenditures, USD trillions

11.3 10.9 10.5 10.1 9.7 9.3 05


Source: BEA

2.9% growth trend from earlier peak 2.2% growth trend from recession end

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For the year ahead, we expect that consumer spending will stay in a roughly 2.0% growth track, held down by the effect of tax increases, by the reluctance to increase the use of credit, and by slow growth in nominal incomes. The situation will not be helped by the ongoing fiscal contraction by the federal government or by the resulting cutbacks in government jobs.

Investment spending still sluggish


The addition of a new category of investment spending to the GDP data did not help the growth outlook very much. In its comprehensive revision, the BEA added intellectual property products as a new category of business investment. This grouping includes software, research and development expenditures, and certain entertainment, literary and artistic originals. These items now make up approximately 3.6% of GDP. The production of these items has been growing at roughly 3.4% annually, right in line with the economys long-run growth rate. Since the end of the recession in 2009, the contribution of this category to the overall growth rate of GDP has been in line with its share of GDP. However, other categories of investment spending have started to flag recently. The overall growth of business spending on equipment and new structures has decelerated sharply since the second quarter of 2012. As a result, business spending added only 0.3 percentage points to GDP growth in the past year, much less than the year before. GDP grew 2.8% from Q2 2011 to Q2 2012, with business investment spending accounting for a full percentage point of that growth (see Figure 5).

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Over the past four quarters, GDP has increased only 1.4%, a marked deceleration from the previous years growth rate. The slowdown in business investment spending accounted for about half of the dropoff in GDP growth, or 0.7 percentage points. The slowdown in business spending is somewhat surprising since average profit margins are high, financing costs are low, and average stock prices have been rising strongly for the past year. However, the growth in business profits has slowed. The BEAs measure of economy-side corporate profits increased only 2.1% in the year through Q1 2013. Thats down from a growth rate of 12.8% the year before. Profits are high as a share of national income, but the growth of profits may be stalling out.
Figure 5. Business investment spending surprisingly soft over past year
1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 -2.0 Business investment spending, contribution to GDP growth, % -2.5 07
Source: BEA

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Business profits and business expectations about the future growth in demand are the key drivers of business investment spending. If businesses start to feel more confident about the future growth of final demand, investment spending may pick up again. We expect a faster pace of business investment spending in the quarters ahead. A recent rebound in new orders for capital equipment points in that direction. Spending on commercial structures such as factories and office buildings is also likely to pick up, we believe, thanks to low long-term interest rates and an increased willingness of banks to lend for commercial property development. Even so, we do not expect an investment boom in the year ahead, just enough to help support a moderate economic expansion at close to the economys trend growth rate. However, there is a risk that concerns over fiscal drag and slow growth in the global economy could temper investment plans by many businesses. Consumers seem to have settled into a steady 2.0% growth track and are unlikely to be a drag on economic growth in the year ahead. But business spending is more of a wild card, and sluggishness in investment spending could curtail GDP growth in the year ahead.

Economics US 5 August 2013

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Fiscal Drag and the Federal Reserve


Tax increases and cutbacks in spending by the federal government have imposed a serious drag on economic growth this year. At the same time, uncertainties surrounding the effects of fiscal contraction are influencing the outlook for monetary policy. Policymakers at the Federal Reserve are closely monitoring the effects of federal fiscal policy. Chairman Ben Bernanke made this clear in his 18-19 July monetary policy testimony to Congress: The pickup in economic growth projected by most FOMC participants partly reflects their view that federal fiscal policy will exert somewhat less drag over time, as the effects of the tax increases and the spending sequestration diminish As I noted, the economic outcomes that Committee participants saw as most likely in their June projections involved continuing gains in labor markets, supported by moderate growth that picks up over the next several quarters as the restraint from fiscal policy diminishes. Over the past four quarters, cutbacks in federal spending have subtracted 0.3 percentage points from overall GDP growth almost entirely associated with reduced spending on national defense (Figure 6). Cutbacks in defense spending predate the onset of sequestration at the beginning of March this year. The BEA reports that nominal expenditures on national defense peaked in the middle of 2011. Reduced spending over the past two years has reflected the combined impact of the drawdown of US military operations in Iraq and Afghanistan, as well as the broader reductions to the defense budget that were implemented prior to sequestration.
Figure 6. The fiscal drag on economic growth intensified in early 2013

0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 -0.1 -0.2 -0.3 -0.4 06

Federal government contribution to real GDP growth over the past year, percentage points:

National defense Nondefense Total federal government

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Source: Bureau of Economic Analysis

These developments have had a significant impact on Department of Defenses (DoD) employment of both military personnel and of civilian workers (Figure 7). The number of active duty military personnel started to fall in the middle of 2011, reflecting the drawdown from overseas operations. Over the past two years, the number of personnel on active duty has declined by about 50,000, to 1.39mn earlier this year. It is worth noting that the Bureau of Labor Statistics does not include military personnel in its estimates of either payroll or household employment. Only civilian employment within the DoD is included. DoD

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civilian employment began to fall in early 2012, as the Department implemented reductions in spending mandated by the Budget Control Act of 2011. After spending limits were cut further by sequestration this year, the DoD instituted hiring freezes and layoffs of temporary workers, resulting in a continued drop in civilian employment.
Figure 7. Job cuts at the Department of Defense are a drag on the overall growth in employment

560

1440

Department of Defense employment, 000


540 520 500 480 05 06 07 08 09 10 Department of Defense civilian payroll employment (left axis) 1420 1400 1380 1360 11 12 13 Active duty military personnel (right axis)

Source: Bureau of Labor Statistics, Department of Defense

However, the most notable cutbacks in defense spending have not necessarily been reflected in lower employment. According to the BEA, the most pronounced spending cuts have been taken the form of fewer purchases of intermediate goods and services, particularly in maintenance categories such as installation support, weapons support, and personnel support. Most of these items had already seen a reduction in spending over the past two years, again indicative of the drawdown of overseas military operations as well as broader budgetary cuts. But the slowdown accelerated in Q4 2012, probably influenced in part by the imminent threat of sequestration as part of the year-end fiscal cliff. After falling sharply in Q4, the level of intermediate purchases continued to decline in Q1 and Q2.
Figure 8. Large dollar cutbacks in Defense purchases; employee compensation has yet to decline

275 Government expenditures, USDbn (annual rate) 250 225 200 175 150 04 05 06 07
Source: Bureau of Economic Analysis

300 275 250 225 200 175

Defense employee compensation: military plus civilian (left axis) Defense purchases of intermediate goods & services (right axis) 08 09 10 11 12 13

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Ongoing fiscal restraint presents a complication for the Federal Reserve in its assessment of the economy and the appropriate course of monetary policy. Speaking before the National Bureau of Economic Research on 10 July, Mr. Bernanke noted: But there are also some risks which I think are very important for us as policy makers to look at. First, it's still early to say that we have weathered the fiscal restraint. I think it's very difficult to know how long the lags are between congressional decisions and actual spending and production decisions. So, we're going to continue to watch and see whether growth is resilient going forward for the rest of the year Again, our projections are that there'll be some pickup and growth, but that does depend on overcoming the remainder of the fiscal headwinds. Financial markets are once again paying close attention to the latest budgetary developments in Washington. Congress must pass budget legislation by 30 September to avoid a government shutdown associated with a lack of spending authority. Disagreement about potential changes to tax and spending policies has raised the possibility that Congress will be go to the brink once again. At a minimum, a lack of agreement could cause to Congress to resort to short-term, stop-gap measures to avoid a shutdown, as occurred during the spring of 2011. If a budgetary stand-off were to persist into October, fears surrounding the debt limit on federal borrowing would come back into play. The soft deadline for the debt ceiling was reached in May; since then the Treasury Department has relied on extraordinary measures to stay within its borrowing headroom. The hard deadline for borrowing could be reached sometime in October or November, with the exact timing dependent on the pace of Treasury tax receipts. The minutes of recent FOMC meetings indicate that the policymakers at the Fed are inclined to reduce the size of the current program of quantitative easing (QE) from the current USD85bn per month in combined purchases of agency MBS and longer-term US Treasury securities sometime later this year. The timing of that decision will be influenced not only by data on the labor market and the economys overall growth but also by the outlook for further fiscal contraction. The impact of budget sequestration on spending in the current fiscal year (through September) is still uncertain. Furloughs of federal employees, for example, mostly started in July even though the process of sequestration began in March. Direct cuts in federal spending may also intensify in the current quarter. Meanwhile, whether sequestration will continue in the new budget year starting in October is still up in the air. Leaders of both the Democratic and the Republican Parties are currently searching for some compromise that will replace the near-term spending cuts required by sequestration with longer-term cutbacks in entitlement spending. The outcome of those negotiations will have an important bearing on the economys near-term growth prospects, and by implication, on the FOMCs decision regarding when to start tapering the size of the current QE program. Given all the uncertainties that exist regarding the economys near-term growth prospects and also regarding the outlook for fiscal policy, we continue to believe that the FOMC will hold steady at the next policy meeting in September. A decision to taper QE, in our view, is more likely to come at the December FOMC meeting, particularly if our expectation for a pickup in GDP growth in Q4 turns out to be correct.

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Disclosure appendix
Analyst Certification
The following analyst(s), economist(s), and/or strategist(s) who is(are) primarily responsible for this report, certifies(y) that the opinion(s) on the subject security(ies) or issuer(s) and/or any other views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Kevin Logan and Ryan Wang

Important Disclosures
This document has been prepared and is being distributed by the Research Department of HSBC and is intended solely for the clients of HSBC and is not for publication to other persons, whether through the press or by other means. This document is for information purposes only and it should not be regarded as an offer to sell or as a solicitation of an offer to buy the securities or other investment products mentioned in it and/or to participate in any trading strategy. Advice in this document is general and should not be construed as personal advice, given it has been prepared without taking account of the objectives, financial situation or needs of any particular investor. Accordingly, investors should, before acting on the advice, consider the appropriateness of the advice, having regard to their objectives, financial situation and needs. If necessary, seek professional investment and tax advice. Certain investment products mentioned in this document may not be eligible for sale in some states or countries, and they may not be suitable for all types of investors. Investors should consult with their HSBC representative regarding the suitability of the investment products mentioned in this document and take into account their specific investment objectives, financial situation or particular needs before making a commitment to purchase investment products. The value of and the income produced by the investment products mentioned in this document may fluctuate, so that an investor may get back less than originally invested. Certain high-volatility investments can be subject to sudden and large falls in value that could equal or exceed the amount invested. Value and income from investment products may be adversely affected by exchange rates, interest rates, or other factors. Past performance of a particular investment product is not indicative of future results. HSBC and its affiliates will from time to time sell to and buy from customers the securities/instruments (including derivatives) of companies covered in HSBC Research on a principal or agency basis. Analysts, economists, and strategists are paid in part by reference to the profitability of HSBC which includes investment banking revenues. For disclosures in respect of any company mentioned in this report, please see the most recently published report on that company available at www.hsbcnet.com/research. * HSBC Legal Entities are listed in the Disclaimer below.

Additional disclosures
1 2 3 This report is dated as at 05 August 2013. All market data included in this report are dated as at close 02 August 2013, unless otherwise indicated in the report. HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its Research business. HSBC's analysts and its other staff who are involved in the preparation and dissemination of Research operate and have a management reporting line independent of HSBC's Investment Banking business. Information Barrier procedures are in place between the Investment Banking and Research businesses to ensure that any confidential and/or price sensitive information is handled in an appropriate manner.

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Disclaimer
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Global Economics Research Team


Global
Stephen King Global Head of Economics +44 20 7991 6700 stephen.king@hsbcib.com Karen Ward Senior Global Economist +44 20 7991 3692 karen.ward@hsbcib.com Madhur Jha +44 20 7991 6755 madhur.jha@hsbcib.com Izumi Devalier +852 2822 1647 Julia Wang +852 2822 4687 izumidevalier@hsbc.com.hk juliarwang@hsbc.com.hk

Global Emerging Markets


Pablo Goldberg Head of Global EM Research +1 212 525 8729 pablo.a.goldberg@hsbc.com Bertrand Delgado EM Strategist +1 212 525 0745

Europe & United Kingdom


Janet Henry Chief European Economist +44 20 7991 6711 janet.henry@hsbcib.com Simon Wells Chief UK Economist +44 20 7991 6718 simon.wells@hsbcib.com Matteo Cominetta +44 20 7991 6708 John Zhu +44 20 7991 2170 Germany Stefan Schilbe +49 211910 3137 France Mathilde Lemoine +33 1 4070 3266 matteo.cominetta@hsbc.com john.zhu@hsbcib.com

bertrand.j.delgado@us.hsbc.com

Emerging Europe and Sub-Saharan Africa


Murat Ulgen Chief Economist, Central & Eastern Europe and sub-Saharan Africa +44 20 7991 6782 muratulgen@hsbc.com Alexander Morozov Chief Economist, Russia and CIS +7 495 783 8855 alexander.morozov@hsbc.com Artem Biryukov Economist, Russia and CIS +7 495 721 1515 artem.biryukov@hsbc.com Agata Urbanska Economist, CEE +44 20 7992 2774 Melis Metiner Economist, Turkey +90 212 376 4618

stefan.schilbe@hsbc.de

agata.urbanska@hsbcib.com

mathilde.lemoine@hsbc.fr

North America
Kevin Logan Chief US Economist +1 212 525 3195 kevin.r.logan@us.hsbc.com Ryan Wang +1 212 525 3181 David G Watt +1 416 868 8130 ryan.wang@us.hsbc.com david.g.watt@hsbc.ca

melismetiner@hsbc.com.tr

Middle East and North Africa


Simon Williams Chief Economist +971 4 423 6925 Liz Martins Senior Economist +971 4 423 6928

simon.williams@hsbc.com

liz.martins@hsbc.com

Asia Pacific
Qu Hongbin Managing Director, Co-head Asian Economics Research and Chief Economist Greater China +852 2822 2025 hongbinqu@hsbc.com.hk Frederic Neumann Managing Director, Co-head Asian Economics Research +852 2822 4556 fredericneumann@hsbc.com.hk Leif Eskesen Chief Economist, India & ASEAN +65 6658 8962 leifeskesen@hsbc.com.sg Paul Bloxham Chief Economist, Australia and New Zealand +612 9255 2635 paulbloxham@hsbc.com.au Adam Richardson +612 9006 5848 Donna Kwok +852 2996 6621 Trinh Nguyen +852 2996 6975 Ronald Man +852 2996 6743 Sun Junwei +86 10 5999 8234 Sophia Ma +86 10 5999 8232 Su Sian Lim +65 6658 8963 adamrichardson@hsbc.com.au donnahjkwok@hsbc.com.hk trinhdnguyen@hsbc.com.hk ronaldman@hsbc.com.hk junweisun@hsbc.com.cn xiaopingma@hsbc.com.cn susianlim@hsbc.com.sg

Latin America
Andre Loes Chief Economist, Latin America +55 11 3371 8184 andre.a.loes@hsbc.com.br Argentina Javier Finkman Chief Economist, South America ex-Brazil +54 11 4344 8144 javier.finkman@hsbc.com.ar Ramiro D Blazquez Senior Economist +54 11 4348 2616 Jorge Morgenstern Senior Economist +54 11 4130 9229 Brazil Constantin Jancso Senior Economist +55 11 3371 8183 Mexico Sergio Martin Chief Economist +52 55 5721 2164 Central America Lorena Dominguez Economist +52 55 5721 2172

ramiro.blazquez@hsbc.com.ar

jorge.morgenstern@hsbc.com.ar

constantin.c.jancso@hsbc.com.br

sergio.martinm@hsbc.com.mx

lorena.dominguez@hsbc.com.mx