Should developing countries shoulder the crumbling global economy?
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Steve Chiotakis: One interesting twist in the European debt crisis is the prospect of getting help — perhaps — from some the world’s emerging economies, the so-called BRICS countries: Brazil, Russia, India, China and South Africa. But that last nation, South Africa, is the weakest in the group, leading some to ask whether it should be on the hook to help wealthier countries.
Lyal White is Director of the Center for Dynamic Markets at the Gordon Institute of Business Science in Johannesburg. Good morning.
Lyle White: Good morning.
Chiotakis: Is South Africa in a position financially to help Europe solve its debt crisis?
White: I don’t think South Africa in a position in this stage to help any European countries solve their debt crisis. We’ve got a number of our own domestic problems and the notion of assisting the European countries solve their debt crisis is one way the BRICS countries are using their leverage to help stimulate economic growth on a global level once again.
Chiotakis: What have the BRICS countries been saying about this whole situation?
White: We’ve seen for perhaps the first time prominent emerging markets come up with a solution for the traditional mature or developed markets in solving their financial woes which is really a major reversal of fortunes if you like from just ten years ago.
Chiotakis: I know South Africa’s economy isn’t as big as the other BRICS nations, but are South Africans worried about the European debt crisis sending them into recession?
White: South African business is very, very concerned because we do rely very much on markets in Europe and the United states, in those markets that might be suffering from some kind of economic slowdown, in the case of Europe, potential collapse.
Our trade balance is very much skewed in the direction of Europe and to a lesser degree the United States, whereas countries like China, India, and Brazil have diversified themselves a lot more than South Africa has done over the last five to six years.
Chiotakis: Dr. Lyal White over at the Center for Dynamic Markets. Dr. White, thank you.
White: Thank you very much.
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