China’s new economic transition lights up opportunity for Ghana’s agric products export – S&P
China is changing its economic module from an investment-led to a more consumer-led economy and this presents a bright opportunity for Ghana, according to a Standard & Poor’s (S&P) report released August 16, 2012.
The S&P’s report, “For sub-Saharan Africa, China’s rebalancing poses risks and opportunities”, indicated agricultural exports from Ghana stands to gain from the new China economic transition.
“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,” the rating agency said in the report.
Despite Ghana getting an opportunity in the Asian country’s new economic rebalancing, the report indicated that some countries in sub-Saharan Africa (SSA) stand to be at a serious risk as many have grown strongly on the back of China’s boom over the past two decades because they exported commodities such as metals and oil to feed China’s rapid investment expansion.
“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 S&P’s EMEA chief economist Jean-Michel Six.
According to Six, 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, indicating that the boom in capital spending, especially in infrastructure and construction, led to a particularly strong increase in imports of metals and minerals.
The report listed Democratic Republic of Congo (DRC), Zambia, and South Africa, the main SSA exporters of mining commodities, as those countries likely to be most affected by the shift to a consumer-led economy in China.
“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 Jean-Michel 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,” Six added.
African oil exporters like Congo, Nigeria, Angola, and Cameroon could also be less affected in the short term, according to the S&P.
This is because Chinese demand for energy products will continue to be underpinned by the growth in its domestic auto market, it added.
By Ekow Quandzie