Kai Ryssdal: There are two words that seem to move the markets more than anything else: Consumer and confidence. The BBC’s just done a global survey on it. Justin, what did you learn?
Justin Rowlatt: Well, certainly no surprises. For rich countries, the poll found that people living in wealthy economies, well they’re rather a pessimistic bunch — most people expecting bad or mostly bad times to come.
Ryssdal: Stands to reason, I’d say, given their relationships to Europe, right?
Rowlatt: Except emerging economies — many of which also have ties with Europe — are decidedly upbeat. Brazilians, Indians, Chinese — they’re pretty chipper. Cheeriest of all, though, are people in nations like Nigeria and Kenya.
The BBC’s got a regular commentator from Kenya, Wycliffe Muga. He says his country is somewhat affected by the Eurozone crisis — but the biggest casualty in his region is likely to be Africa’s own monetary union.
Wycliffe Muga: Everywhere you go in Kenya, you will find signs of a government seriously trying to bring economic opportunity to its people. We have many new and vastly improved roads, water pipes and power lines stretching into regions where they had never been seen before and other major infrastructure improvements. So even though Kenyans remain acutely aware that around half our population live in extreme poverty, looking at these improvements it is hard not to believe that we have good times ahead.
So is there any chance that the eurozone crisis, itself created by excessive borrowing on the part of some nations, will have a negative impact on our economy, and the current optimistic mood? After all, many of our key trading partners — the buyers of our tea, coffee, fresh-cut flowers, as well as the source markets for our tourists — are Europeans.
Well in the short term, the effects are unlikely to be devastating, though they will definitely be negative. It is true that that people generally respond to economic uncertainty by reducing personal spending. And with both vacations and flowers being, at the end of the day, luxuries which can be swiftly abandoned, we are likely to have fewer tourists visiting and fewer flowers sold. More significant though — whether for good or bad — is the potential long term loss of faith in the virtues of monetary unions.
Developing nations often imitate others when planning for the future. And their planners love little more than creating local versions of what they see working well in richer nations. So the five East African nations of Kenya, Tanzania, Uganda, Rwanda and Burundi have long been working on plans for monetary union, as part of their attempt to create a single East African trading zone.
Still, East African plans for monetary union would be brought to a grinding halt — if, as seems likely, the creation of the euro turns out to be a noble experiment, which never quite worked as advertised.
Ryssdal: Wycliffe Muga is the BBC World Service’s correspondent for “Letter from Africa.” He lives in Mombasa, Kenya.
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