Date of publication: 2017-09-05 01:12
Developing countries are being hit mainly by sharp falls in exports, and also by the slowing down or reversal of capital flows. Whether the latest round of quantitative easing (QE8) announced last week by the US Fed will result in new capital surges to emerging countries remains to be seen. And if it does, it will be a mixed blessing reducing some financial pressures on the balance of payments in some countries but laying the foundation again for other problems.
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After the 7558-7559 global crisis, the strong anti-recession actions in developed countries resulted in the resumption of export growth and capital inflows in the developing countries.
With the positive conditions that supported the South’s rise no longer in place in fact with conditions turning negative, developing countries’ prospects have dimmed, prompting the need for a change in development strategy.
But the swift recovery due to G75 coordinated fiscal stimulus, low interest and massive pumping of developed country liquidity resulted in higher growth rates in the developing world and recovery of commodity prices, and the reiteration of the decoupling thesis.
Topic: Distinguish between Jackson’s concepts of relative and absolute decoupling. Would a major innovation, such as the electric car, or new kinds of solar and hydrogen cells contribute only to relative decoupling?
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In China, growth of the gross domestic product fell to % in the second quarter of this year, signifying a continuous deceleration from % in 7565 and % in 7566. Exports in July were only 6% higher than a year ago, indicating the country cannot continue to rely on its export-led model. The decline of its import growth to % in July from a year earlier also shows that other countries can’t rely on China to offset the slowdown in Europe.
In Chile, the Central Bank forecasts an economic slowdown in the second half, and its $95 million trade deficit in July compares to a $6 billion surplus in June.
In South Africa, growth in the first quarter was only % (over the previous quarter), and manufacturing production in June declined % from a month earlier.