(The following statement was released by the rating agency)
Aug 16 – China’s economic rebalancing from an investment-led to a more consumer-led economy
presents serious risks for sub-Saharan African (SSA) countries, but also some opportunities,
says Standard Poor’s today in the report “For Sub-Saharan Africa, China’s
Rebalancing Poses Risks And Opportunities”.
Many SSA countries have grown strongly on the back of China’s boom over the
past two decades because it exported commodities such as metals and oil to
feed China’s rapid investment expansion. But now that China’s economy is
rebalancing away from investment and exports toward consumption, this could
have significant consequences for commodity markets and SSA
commodity-producing countries, the report says.
“These risks relate first to the timing of the adjustment in China,” said
Standard Poor’s EMEA chief economist. “A rapid shift could cause a steeper
decline in China’s overall GDP and import growth rates, leading to a fall in
SSA commodity exports to the country.”
The risks also relate to the changing composition of China’s imports, the
report says. The boom in capital spending, especially in infrastructure and
construction, led to a particularly strong increase in imports of metals and
minerals. Those countries likely to be most affected by the shift to a
consumer-led economy are therefore the Democratic Republic of Congo (DRC),
Zambia, and South Africa, the main SSA exporters of mining commodities.
Conversely, exporters of agricultural products, such as Ghana and Congo, may
not see much of a change, and could even benefit from the Chinese transition.
Oil exporters–Congo, Nigeria, Angola, and Cameroon–could also be less
affected in the short term, in our opinion, because Chinese demand for energy
products will continue to be underpinned by the growth in its domestic auto
market.
“Nevertheless, we anticipate that China’s rebalancing will also offer new
opportunities for SSA economies that are able to expand their consumer goods
exports,” said Mr. Six. “South Africa is an example of an economy that has
succeeded in increasing its exports of consumer goods, especially to China, in
recent years.”
