Economics experts attending the offshore investors’ conference in Gaborone this week have thrown some light into the dark possibility of another wave of global recession.The 5th Botswana Insurance Fund Management (BIFM )offshore investors conference brought together economics stalwarts and international investment managers in a bid to give clients an update directly from managers and enhance the offshore investor’s skills.
The conference that was held under the theme ‘Managing Money in challenging times covered various topics such as the influence of China in Africa, Minerals and Resources in Africa and Banks-post financial crisis. Various presenters at the conference highlighted fears that the world economy may slip into another recession which, they said, was fast gathering force. They argued that the odds of the economy going back into recession are at least one in three if nothing new is done to raise demand and spur growth.
The presenters who were drawn from international organizations such as Sanlam Investment Management (SIM) Global and BlackRock said although the problem is attributed to the bad health of the United States economy, the bad news did not only affect the US. They said the European situation remained grim with big EU economies like Spain and Italy inching towards debt crisis, while Japan is still struggling with its post-tsunami recovery.
Banks heralded the previous meltdown and the recession it preceded, and this time round, big financial institutions are said to have set the ball rolling by announcing deep job cuts.
In an interview with Your Money Dr Keith Jefferies, an economist at Econsult Botswana, also admitted that the chances of a second recession or a ‘double dip’were increasing. He said at the very least it seemed that the global economy was heading for a period of slower growth and continued high unemployment.
Jefferies pointed to high debt, the fiscal adjustment needed to bring budget deficits under control, and the reforms needed to ensure the survival of the euro zone, and reluctance to take tough political decisions as factors that will lead to the downturn.
While he said it was impossible to tell the anticipated depth of the recession, Jefferies said Botswana would feel the impact. “Botswana is dependent upon exports to the world economy and any recession or growth slowdown will have a negative impact on the country’s GDP growth.”
The only positive side, Jefferies said, is that a global growth slowdown will cause oil prices to fall, which will help to reduce inflation. Presenters at the workshop included Steve Mills of BIFM, Jacobus Oosthuizen of SIM Global, Colin Graham and Robert Fairbairn of BlackRock.