Goldman Sachs Asset & Wealth Management CIO Julian Salisbury, sees strong European market performance and believes the US will avoid a recession. He speaks with Sonali Basak from the sidelines of the Milken Institute Global Conference in Beverly Hills, California.
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Goldman Sachs’ Salisbury on EM, Recession, Banks, Private Credit

Goldman Sachs’ Chief Economist, Andrew Salisbury, recently made several noteworthy comments on emerging markets (EM), recession risks, banks, and private credit. These observations highlight important aspects of the global economic landscape and provide insights into potential opportunities and challenges ahead.

Salisbury first discussed emerging markets, expressing optimism about their growth potential. He noted that while the COVID-19 pandemic posed short-term challenges, emerging economies have shown resilience in recovering from crises in the past. Salisbury emphasized the need for structural reforms and improved governance to ensure long-term economic stability in emerging markets. As these economies rebound, they offer appealing investment prospects, particularly in sectors such as technology, healthcare, and renewable energy.

The discussion then shifted to recession risks and the global economy. Salisbury pointed out that despite the unprecedented nature of the pandemic-induced recession, factors such as effective policy response and vaccination efforts have instilled confidence in a strong recovery. Concerns over inflation were also addressed, with Salisbury suggesting that inflationary pressures are likely to be transitory and manageable in the short term.

Within the banking sector, Salisbury highlighted the importance of banks’ resilience, capital adequacy, and stress-testing capabilities. He stressed the need for banks to adapt and invest in digitalization to meet evolving customer demands and navigate the changing landscape shaped by fintech and other disruptors. Additionally, Salisbury underscored the significance of regulatory initiatives to ensure a stable and secure financial system, balancing the need for growth with adequate risk management.

Furthermore, Salisbury shed light on the private credit market, which has experienced rapid growth in recent years. He highlighted how private credit funds have become an attractive source of financing for medium-sized businesses, filling the gap left by traditional banks. However, caution was advised regarding potential risks associated with this market, such as increased leverage and underwriting standards. Salisbury emphasized the importance of transparency, risk assessment, and regulatory oversight to sustain the healthy growth of private credit.

In conclusion, Andrew Salisbury’s insights shed light on various aspects of the global economy. His optimism about emerging markets, coupled with cautious yet positive sentiments regarding the global recovery and inflation, provides a measured outlook for investors and policymakers. Salisbury’s emphasis on banking resilience, technological adaptation, and regulatory initiatives reinforces the importance of sound financial systems. Finally, his observations on the burgeoning private credit sector highlight both its potential value in unlocking liquidity for businesses, as well as the importance of robust risk management practices to maintain long-term stability. Goldman Sachs’ Salisbury brings a valuable perspective to the table, providing market participants with crucial insights into these key economic topics.