Global crisis will affect SA more than its neighbours

Although there are distinct signs of another global crisis developing, the impact is likely to be on the developed nations, and with only a limited effect on sub- Saharan Africa, according to Duncan Bonnett of trade consultants, Whitehouse & Associates. With the eurozone teetering under a debt crisis in Greece, and other nations like Spain, Portugal, Italy and Ireland edging towards a similar state – and the mighty US economy just having forestalled its own debt crisis – the developed world is in a shaky state. “We are obviously looking at a similar situation to 2008 – even worse,” Bonnett told FTW. But he suggested that the African countries are likely to keep growing at their current rate, with their economies unattached to the global situation. “So I still see a 5% growth rate for most African economies continuing,” Bonnett added. He sees gold being looked upon as a safe haven, and prices surging ahead as a result of the financial crisis. But other commodities, like minerals, are not seen in the same light, and prices could slip a bit. “In 2008, what we saw was a lot of the mineral exploration and development being driven by mid-tier independents, which are reliant on borrowed cash,” Bonnett said. “And if investors are suddenly gun-shy, these outfits will not be able to keep developing their projects. “I expect we’ll look at a similar situation this time. But commodities have much stronger prices than before, so the effect will be less severe. “Also, although a slowdown in the developed countries would see an accompanying slow-down in China – a major buyer of African commodities – it would only be a small bit slower, so African economies won’t collapse. And they are much more robust economies than they have been in the past.” Bonnett also noted that the oil price hadn’t dropped as much as it used to when there was an international crisis. “Even under the present situation, the price is still in a comfort level, and the African oil suppliers won’t suffer,” he said. But he is less optimistic about chances for this country. “SA is much more linked into the US and European economies,” he said. “The luxury goods we export, like wines and fruit, will be impacted. So we’ll suffer more than the likes of Zambia, Angola and Zimbabwe would.”