‘SA poised to gain from world economic swing’

2011-08-26 00:00

AMID all the talk of a second deep recession, it is worth reflecting on certain longer-term economic trends that have favourable potential consequences for South Africa.

Moneyweb founder Alec Hogg made this point in a special address to the Durban Chamber of Commerce and Industry recently.

Looking beyond the fallout of the current economic cycle, Hogg reminded guests about the economic swing from the West to the East.

A firm believer in investment guru Warren Buffet, Hogg regularly attends Buffet’s Berkshire Hathaway annual shareholder meeting in Omaha in the U.S. He also attends the annual World Economic Forum meeting in Davos, Switzerland.

Hogg said the lessons from Davos were six-fold. First, the Western world has deep structural problems epitomised by the sovereign debt crisis. Second, there is massive uncertainty around the consequences of the quantitative easing programmes just ended.

Furthermore, the crisis has accelerated the shift of power to the East. Hogg said it is plain to see that capital is increasingly switching to the emerging world. Davos 2011 also confirmed that Africa is attractive once more. Finally, disciplined countries implementing prudent fiscal management are the major beneficiaries in the global economy.

South Africa’s prospects are often forgotten in the volatile global economic and financial market sphere.

Hogg said resource-rich South Africa remains poised to benefit from the growth of the East and Africa, adding that the benefits of the country’s inclusion in the Brics (Brazil, Russia, India, China and South Africa) group of emerging markets should not be underestimated.

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