Global crisis adds impetus to South-South trade growth

The importance of South-South trade should not be underestimated with or without a global financial crisis. According to Allesandro Teixeira, president of Apex-Brasil, the Brazilian Trade and Investment Promotion Agency, developing countries such as Brazil, India and China have in the past been very reliant on the USA and Europe for external trade. “In the case of Brazil we took a strategic decision in 2003 to diversify our trade partners and it was a very good decision in light of the economic crisis because had we not, the country would have been bankrupt.” Up until 2003 some 75% of Brazil’s trade balance was concentrated in the USA, Italy and France, all countries that are currently in a bad shape economically. South African Minister of Trade and Industry Rob Davies says that the global financial crisis only accelerated the trend of South-South trade and there is no doubting the importance economies such as China, India and Brazil will play in the future. Expectations are that more than half of the world trade in coming years will be between developing countries. Dr Mills Soko, a senior lecturer in business at UCT and CEO of research company Mthente Consulting, says while South Africa should not de-emphasise the importance of Western markets, we do need to diversify as it makes economic sense. In an interview with TradeInvestSA, Soko said it was important for South Africa to manage its relationship with China. “It provides a wonderful opportunity for African countries to extricate themselves from the economic mess. The demand from China will however reach a saturation point, it won’t be there forever, but it does provide a great window of opportunity.” He agrees that South-South trade is a good thing to pursue saying that infrastructure development has been on the increase throughout Africa thanks to Chinese investment. “Of course there is self-interest there, but I think it is a practical manifestation of South-South cooperation. It’s not only trade, but financial cooperation and infrastructure development.”