Economists seem to agree that the effect of a Brexit vote on emerging markets such as SA may not be significant.
Any shock to global capital flows would probably be short-lived‚ Capital Economics economists Neil Shearing and Liza Ermolenko said in a note.
Even if the UK economy contracted by 5% and UK imports fell by 10%‚ the expected drop in emerging-market exports to the UK would be equivalent to just 0.1% of aggregate emerging market’s GDP‚ the economists at Capital Economist estimate.
Also read: Game of Thrones will suffer under Brexit
A Brexit vote would probably cause rand weakness and shave about 0.1% off SA’s GDP‚ according to research by North West University School of Business and Governance professor Raymond Parsons and director of the TRADE research entity at the university‚ Wilma Viviers.
Although small‚ the 0.1% was a loss in growth SA could ill-afford‚ given forecasts for economic growth being so close to zero in 2016‚ the professors said. “Higher risk anxiety stemming from a Brexit may mean rising volatility in currency markets including the rand‚ especially if the dollar strengthens‚” they said.
Sustained rand weakness does not bode well for SA. Not only does it raise the cost of imports‚ it also fans inflation and encourages interest rate hikes.
– TMG Digital/BDlive
Brexit vote could shave 0.1% off SA’s GDP
Economists seem to agree that the effect of a Brexit vote on emerging markets such as SA may not be significant.
Any shock to global capital flows would probably be short-lived‚ Capital Economics economists Neil Shearing and Liza Ermolenko said in a note.
Even if the UK economy contracted by 5% and UK imports fell by 10%‚ the expected drop in emerging-market exports to the UK would be equivalent to just 0.1% of aggregate emerging market’s GDP‚ the economists at Capital Economist estimate.
Also read: Game of Thrones will suffer under Brexit
A Brexit vote would probably cause rand weakness and shave about 0.1% off SA’s GDP‚ according to research by North West University School of Business and Governance professor Raymond Parsons and director of the TRADE research entity at the university‚ Wilma Viviers.
Although small‚ the 0.1% was a loss in growth SA could ill-afford‚ given forecasts for economic growth being so close to zero in 2016‚ the professors said. “Higher risk anxiety stemming from a Brexit may mean rising volatility in currency markets including the rand‚ especially if the dollar strengthens‚” they said.
Sustained rand weakness does not bode well for SA. Not only does it raise the cost of imports‚ it also fans inflation and encourages interest rate hikes.
– TMG Digital/BDlive
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