“World economy can live with it” - Josef Ackermann, chairman of Deutsche Bank
Reuters | Nov 8, 2007
By Jane Merriman and Peg Mackey
LONDON (Reuters) - Oil will breach the $100 barrier, but this will not kill off global economic growth, the head of Germany’s Deutsche Bank (DBKGn.DE: Quote, Profile, Research) said at the Reuters Finance Summit.
“I’d bet a lot the $100 will be pushed through,” said Josef Ackermann, chairman of Deutsche Bank.
But oil at $100 a barrel would not make much difference to cost pressures on the world economy, although it is psychologically significant, he said.
“From a cost perspective I don’t think that ($100 oil) will be a huge difference. It signals that the economy is robust, otherwise we’d see different price levels,” he said.
“The strong euro has somewhat offset the oil price increase.”
Oil is at record highs above $96 a barrel, driven by strong demand from China and India, concerns about tightening supplies and a weak dollar, which has sunk to all-time lows against the euro.
Ackermann said the credit crisis in the financial markets had made investors wary of complex financial investments, which had seen some money flow into commodities such as oil and gold.
“The flight to quality is a flight to simplicity,” he said. “It’s easier to buy gold, you can even touch it.”
Gold is near its highest for 28 years, partly due to the weak dollar.
Ackermann said although the credit crisis had caused problems in some areas of the investment banking industry, some businesses remained very strong, including foreign exchange and equities.
Deutsche Bank, for example, is expanding in commodities as are several other investment banks.
“We started 2 years ago and we are seeing good results,” he said.
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