News

    US Financial Turmoil Could Adversely Affect Africa, Experts Say

     

    Financial experts say the financial crisis in the United States is expected to adversely affect most African countries. A top US investment company, Lehman Brothers, filed for bankruptcy protection Monday, sending shock waves through local and international financial markets.

    In a conference call Monday, Sebastian Mallaby and Benn Steil, senior economists at the Council on Foreign Relations, said the impact of the U.S. financial crisis will be hard on Africa's emerging markets.

    Steil said he thinks they will be hit particularly hard…. “You are seeing a flight to safety. You are seeing investors in Europe and the United States retrenching capital…. Those falling commodities prices are obviously not going to help at all.”

    Mallaby agreed: "It seems to me that…African economies as well as other emerging economies around the world have been feeling the effects of the ups and downs of finance in the U.S. and other developed market. So, at the time when commodity prices were high, mobile global capital flowed into Africa and pushed asset prices up, and that made capital cheap…and fueled growth. And now,” he said, “you are seeing something of the opposite cycle, as commodity prices come down and that effect goes into reverse."

    The economist said the current financial crisis is generating comparisons to problems faced by emerging economies in the past.

    Steil noted that some countries in other parts of the world probably can weather the financial shock “much better than they might have in the 1990s. I'm thinking in the European context of countries like Greece and Portugal and Slovenia, that have adopted the Euro as a currency and internationally traded currency. So, their current account deficits are no longer of concern to the markets. In the case of Central America, interestingly enough, I think El Salvador and Ecuador are somewhat protected from international turmoil by the fact that they no longer have domestic vulnerable currencies and are using the dollar as their currency."

    Some analysts, including Mallaby and Steil, praised Treasury Secretary Henry Paulson for refusing to use U.S. taxpayers' money to bail out Lehman Brothers. They say more stringent regulations are needed in the financial market. Mallaby explained the perspective of the two economists: "What we try to bring, which is a little bit different to other people who comment on this crisis, is that we are looking at the Council for Foreign Relations, the interplay between international financial issues and US power, US policy.”Financial experts say the financial crisis in the United States is expected to adversely affect most African countries. A top US investment company, Lehman Brothers, filed for bankruptcy protection Monday, sending shockwaves through local and international financial markets. In a conference call Monday, Sebastian Mallaby and Benn Steil, senior economists at the Council on Foreign Relations, said the impact of the U.S. financial crisis will be hard on Africa's emerging markets. Steil said he thinks they will be hit particularly hard…. “You are seeing a flight to safety. You are seeing investors in Europe and the United States retrenching capital…. Those falling commodities prices are obviously not going to help at all.”

    Mallaby agreed: "It seems to me that…African economies as well as other emerging economies around the world have been feeling the effects of the ups and downs of finance in the U.S. and other developed market. So, at the time when commodity prices were high, mobile global capital flowed into Africa and pushed asset prices up, and that made capital cheap…and fueled growth. And now,” he said, “you are seeing something of the opposite cycle, as commodity prices come down and that effect goes into reverse."

    The economist said the current financial crisis is generating comparisons to problems faced by emerging economies in the past.

    Steil noted that some countries in other parts of the world probably can weather the financial shock “much better than they might have in the 1990s. I'm thinking in the European context of countries like Greece and Portugal and Slovenia, that have adopted the Euro as a currency and internationally traded currency. So, their current account deficits are no longer of concern to the markets. In the case of Central America, interestingly enough, I think El Salvador and Ecuador are somewhat protected from international turmoil by the fact that they no longer have domestic vulnerable currencies and are using the dollar as their currency."

    Some analysts, including Mallaby and Steil, praised Treasury Secretary Henry Paulson for refusing to use U.S. taxpayers' money to bail out Lehman Brothers. They say more stringent regulations are needed in the financial market.

    Mallaby explained the perspective of the two economists: "What we try to bring, which is a little bit different to other people who comment on this crisis, is that we are looking at the Council for Foreign Relations, the interplay between international financial issues and US power, US policy.”


    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Press Freedom in Myanmar Fragile, Limitedi
    X
    Katie Arnold
    May 04, 2016 12:31 PM
    As Myanmar begins a new era with a democratically elected government, many issues of the past confront the new leadership. Among them is press freedom in a country where journalists have been routinely harassed or jailed.
    Video

    Video Press Freedom in Myanmar Fragile, Limited

    As Myanmar begins a new era with a democratically elected government, many issues of the past confront the new leadership. Among them is press freedom in a country where journalists have been routinely harassed or jailed.
    Video

    Video Taliban Threats Force Messi Fan to Leave Afghanistan

    A young Afghan boy, who recently received autographed shirts and a football from his soccer hero Lionel Messi, has fled his country due to safety concerns. He and his family are now taking refuge in neighboring Pakistan. VOA's Ayaz Gul reports from Islamabad.
    Video

    Video Major Rubbish Burning Experiment Captures Destructive Greenhouse Gases

    The world’s first test to capture environmentally harmful carbon dioxide gases from the fumes of burning rubbish took place recently in Oslo, Norway. The successful experiment at the city's main incinerator plant, showcased a method for capturing most of the carbon dioxide. VOA’s Deborah Block has more.
    Video

    Video EU Visa Block Threatens To Derail EU-Turkey Migrant Deal

    Turkish citizens could soon benefit from visa-free travel to Europe as part of the recent deal between the EU and Ankara to stem the flow of refugees. In return, Turkey has pledged to keep the migrants on Turkish soil and crack down on those who are smuggling them. Brussels is set to publish its latest progress report Wednesday — but as Henry Ridgwell reports from London, many EU lawmakers are threatening to veto the deal over human rights concerns.
    Video

    Video Tensions Rising Ahead of South China Sea Ruling

    As the Philippines awaits an international arbitration ruling on a challenge to China's claims to nearly all of the South China Sea, it is already becoming clear that regardless of which way the decision goes, the dispute is intensifying. VOA’s Bill Ide has more from Beijing.
    Video

    Video Painting Captures President Lincoln Assassination Aftermath

    A newly restored painting captures the moments following President Abraham Lincoln’s assassination in 1865. It was recently unveiled at Ford’s Theatre in Washington, where America’s 16th president was shot. It is the only known painting by an eyewitness that captures the horror of that fateful night. VOA’s Julie Taboh tells us more about the painting and what it took to restore it to its original condition.
    Video

    Video Elephant Summit Results in $5M in Pledges, Presidential Support

    Attended and supported by three African presidents, a three-day anti-poaching summit has concluded in Kenya, resulting in $5 million in pledges and a united message to the world that elephants are worth more alive than dead. The summit culminated at the Nairobi National Park with the largest ivory burn in history. VOA’s Jill Craig attended the summit and has this report about the outcomes.
    Video

    Video Displaced By War, Syrian Artist Finds Inspiration Abroad

    Saudi-born Syrian painter Mohammad Zaza is among the millions who fled their home for an uncertain future after Syria's civil war broke out. Since fleeing Syria, Zaza has lived in Lebanon, Egypt, Jordan and now Turkey where his latest exhibition, “Earth is Blue like an Orange,” opened in Istanbul. He spoke with VOA about how being displaced by the Syrian civil war has affected the country's artists.
    Video

    Video Ethiopia’s Drought Takes Toll on Children

    Ethiopia is dealing with its worst drought in decades, thanks to El Nino weather patterns. An estimated 10 million people urgently need food aid. Six million of them are children, whose development may be compromised without sufficient help, Marthe van der Wolf reports for VOA from the Metahara district.
    Video

    Video Little Havana - a Slice of Cuban Culture in Florida

    Hispanic culture permeates everything in Miami’s Little Havana area: elderly men playing dominoes as they discuss politics, cigar rollers deep at work, or Cuban exiles talking with presidential candidates at a Cuban coffee window. With the recent rapprochement between Cuba and United States, one can only expect stronger ties between South Florida and Cuba.
    Video

    Video California Republicans Weigh Presidential Choices Amid Protests

    Republican presidential candidates have been wooing local party leaders in California, a state that could be decisive in selecting the party's nominee for U.S. president. VOA's Mike O’Sullivan reports delegates to the California party convention have been evaluating choices, while front-runner Donald Trump drew hundreds of raucous protesters Friday.
    Video

    Video ‘The Lights of Africa’ - Through the Eyes of 54 Artists

    An exhibition bringing together the work of 54 African artists, one from each country, is touring the continent after debuting at COP21 in Paris. Called "Lumières d'Afrique," the show centers on access to electricity and, more figuratively, ideas that enlighten. Emilie Iob reports from Abidjan, the exhibition's first stop.

    Special Report

    Adrift The Invisible African Diaspora