“Yuan Move Rattles Africa”
The Wall Street Journal, August 18, 2015, p.A6
“The shock waves from China’s surprise yuan devaluation are ricocheting through African economies, sending currencies tumbling and stoking anxiety that the continent’s biggest trading partner might be losing its appetite for everything from oil to wine. … China’s demand for Angolan oil, Zambian copper and South African gold has fueled a steep increase in trade, helping fuel rapid growth but leaving economies exposed to policy shifts in Beijing. … Now, a weaker yuan is stoking fears in some African treasury departments and boardrooms that China’s buying power will be eroded—and that the world’s second-biggest economy may be slowing even more than official statistics suggest. … Angola is battling a grinding foreign-exchange shortage, as falling oil prices and slack demand from China slash revenue from the crude exports that generate nearly all of its export earnings and public revenue. In Zambia, copper mines are laying off workers or closing because local power shortages have made it too costly to keep production up as long as China’s waning demand holds global prices near six-year lows. South African producers of gold, wine and other goods say lower demand from China means less hope of lifting their country’s battered economy out of a four-year slump. South Africa’s finance ministry is forecasting economic growth of just 1.9% this year.”
Quickie analysis: If the global economy often seems to be like a game of Crack the Whip, Africa always seems to be on the tail end.