NS4301 Summer Term 2015 China Devaluation: Implications for Africa - PowerPoint PPT Presentation

Loading...

PPT – NS4301 Summer Term 2015 China Devaluation: Implications for Africa PowerPoint presentation | free to download - id: 7af49b-MDU5M



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

NS4301 Summer Term 2015 China Devaluation: Implications for Africa

Description:

Move towards more flexible exchange rate? ... an alternative however now the best alternative would be to develop intra-African trade and reduce external risk. – PowerPoint PPT presentation

Number of Views:5
Avg rating:3.0/5.0
Slides: 11
Provided by: Bob1153
Learn more at: http://www.relooney.com
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: NS4301 Summer Term 2015 China Devaluation: Implications for Africa


1
NS4301 Summer Term 2015 China
Devaluation Implications for Africa
2
Overview
  • Chinas August 2015 devaluation
  • For Africa fallout may be cause for longer term
    concern
  • Adding to move to increase intra-African trade
  • Devaluation has created uncertainty
  • Price of gold rose weeks after it appeared
    unattractive
  • For Africa
  • 2014 saw 222 billion in trade with China (three
    times the U.S.)
  • Devaluation may have more far-reaching
    ramifications
  • Impact will depend on motivation for devaluation
  • Simple correction to real exchange rate?
  • Sign of Chinese economy weakening?
  • Move towards more flexible exchange rate?

3
China Currency Appreciation
4
China Current Account
5
Impacts on Africa I
  • Immediate consequence for Africa
  • Manner in which investors reduce demand for
    emerging economy debt
  • Nervous investors tend to flee frontier markets,
    reducing cash and opportunities for investment
    there
  • China may be exporting deflation, drying up money
    supply channels for developing countries making
    it harder to borrow
  • Devaluation will give a considerable boost to
    Chinese exporters products cheaper and more
    competitive
  • Will reduce the ability of African countries to
    produce the same goods or compete

6
Impacts on Africa II
  • Much of Africas trade with China is exporting
    raw industrial materials and commodities
  • These already taking a hammering Bloomberg
    commodities index now at lowest level since 2002
  • Those priced in dollars will be more expensive in
    China
  • Devalued yuan also makes it more expensive for
    Chinese tourists Adverse effects on Kenya,
    South Africa nad Mauritius
  • Africas booming trade with China has offered the
    region an alternative however now the best
    alternative would be to develop intra-African
    trade and reduce external risk.

7
Impacts on Africa III
  • Patrick McGroarty and Martina Stevis, Yuan Move
    Rattles Africa, Wall Street Journal, August 18,
    2015
  • Yuan deflation sending many African currencies
    down
  • In South Africa Rand hit a 14 year low of 12.94
    to the dollar.
  • Currencies in other African countries with close
    ties to China, like Angola and Zambia are also
    down sharply
  • Chinas demand for Angolan oil, Zambian copper
    and South African gold has fueled a steep
    increase in trade but leaving economies exposed
    to China policy shifts

8
Africa Trade with China
9
Impacts on Africa IV
  • Angola is battling foreign exchange shortage as
    falling oil prices and slack demand from China
    slash revenue from crude exports that generate
    nearly all F/X and pubic revenues
  • Zambian copper mines laying off workers or
    closing because local power shortages made it to
    costly to keep production up as long as prices at
    six-year lows
  • South Africa finance ministry forecasting
    economic growth of only

10
Impacts on Africa V
  • Some countries benefitting weaker yuan cuts
    cost of Chinese goods and services they import.
  • East African countries Ethiopia, Kenya and
    Mozambique have run big b/p deficits importing
    Chinese made equipment now cheaper
  • Kenyas diversified economy may gain the most
    from weaker yuan
  • China is second biggest source of imports of
    Kenya and buyers of heavy Chinese machinery say
    considering paying for purchases in yuan rather
    than dollars.
  • As Chinas ties with Africa have strengthened
    some African officials have joined Chinas
    campaign to promote the yuan as an alternative to
    the dollar.
About PowerShow.com