Browsing: Growth

The high-interest rates have made the United States dollar more appealing to investors who are piling into the greenback. The value of other currencies has tumbled: the pound, yuan, euro, and the yen. This depreciation in other currencies makes imports for these countries more expensive in United States dollars. The case for a recession caused by a strong dollar is grimmer in Africa where just about every country on the continent is overextended in terms of United States dollar-denominated borrowings.

Repaying loans in hard currency will be more expensive, especially where their currencies are rapidly depreciating.

The strong US dollar according to CNN has a destabilizing effect on Wall Street.

Companies listed on that bourse conduct business internationally, and a strong dollar will negatively impact their earnings. The second marker of the global economic recession is that US economy is slowing down or stalling. The world’s largest economy is driven by consumption.

However, long-term trends, assessed in decades rather than years, demonstrate that African countries are becoming increasingly appealing as investment locations. All of this is taking place in the world’s last demographic dividend region: Sub-Saharan Africa will soon be the only place on the planet with birth rates at or above replacement level. Telecommunications platforms, agribusiness, and energy are all emerging as new value chains.
However, the shift away from extractive sectors isn’t solely due to improved investment climates in Sub-Saharan Africa – extractives, for example, account for a lesser portion of total investment, but the rate fluctuates in reaction to oil prices. Other countries in the Global South have advanced, resulting in increased labour costs and mature consumer markets, implying reduced long-term profits.