How do emerging markets react to financial shocks?
The recent slow down in the Chinese economy – and its impact on the global market – has made headlines across the world, and has urged emerging economies such as those of African countries to understand the channels of transmission of global economic shocks.
This is the topic of Global Growth and Financial Spillovers and the South African Macro-economy (Palgrave MacMillan), a new book co-authored by Professor Mthuli Ncube of Blavatnik School of Government and Eliphas Ndou and Nombulelo Gumata both of the South African Reserve Bank (SARB).
With a focus on South Africa, the authors look at how Africa’s most advanced and diversified economy has reacted to external economic shocks such as global economic growth, global risk perceptions and financial spillovers.
The South African economic growth has weakened and become volatile following a sequence of unexpected global shocks. Beginning at the onset of the global financial crisis in 2007, these shocks continued with the global recession in 2008, the Eurozone debt crisis and the implementation of unconventional monetary policies.
The authors examine the channels of transmission of such global shocks into the domestic economy by analysing capital flows and their impact on equity and property prices, and economic growth; they also assess whether the global spillovers act through third parties, for example another emerging market.
Assessing the nature of these shocks and quantifying their effects is important for policymakers and researchers alike. Emerging markets such as South Africa have long been concentrating on developing strategies that stimulate strong and steady economic growth, so understanding how events in G8 and/or BRIC countries affect emerging economies is a fundamental step towards developing better policies.
Senior researchers and policy-makers (but also masters and PhD students) working in the areas of macroeconomics, monetary policy, and financial macroeconomics will find in this book a useful analysis tool to understand the policy implications in emerging markets such as South Africa.
