Nouriel Roubini: Africa Has Come as a Positive Suprise

African Business, April 2014 | Go to article overview

Nouriel Roubini: Africa Has Come as a Positive Suprise


Nouriel Roubini has become a superstar economist, one of the world's foremost economic commentators and analysts. An American of Iranian Jewish parentage, he was born in Turkey and grew up in Italy. He was one of the few who foresaw the bubble building in the US property market and the subprime problem. He is fast thinking, fast talking and fast living. Once he talks economics, he hardly pauses for breath. He was part of the group of investors and influencers on Invest Africa's whistle-stop tour of Africa. African Business met him in Brazzaville to get his thoughts on African economies in the global context and how policy makers should react to current economic trends.

AB: Is Africa an emerging or a frontier market, and is this distinction important?

Africa is frontier rather than emerging. I would make a difference between those economies that are emerging markets and those that are frontier and I would say in sub-Saharan Africa, other than maybe Nigeria and South Africa, which I would consider as being emerging, the others are more frontier economies by the standard of how people define different types of economies.

Does that mean they're decoupled from the rest of the world?

There is partial decoupling--I would say it's not full. The kind of pressure that you saw last year, and even recently in emerging markets, has affected to a smaller measure emerging markets or frontier economies in the region because they have less capital mobility, there is less portfolio investment--either in equity markets or bond markets by foreign investors --so there have been pressures but they've been modest.

The currency has fallen slightly in places like Nigeria but we didn't see the kind of massive outflows that you see in some of the bigger emerging markets because it's still more of a frontier economy scenario.

The one country in which the financial flows should have been stronger is South Africa, where portfolio investments into financial current accounts are much larger and therefore outflows of bonds or equities has a bigger effect on currency, bond market, equity prices.

We have seen, in recent years, about a dozen countries in the region issue bonds in foreign currency. Therefore as investors move out, spreads can be pushed upward.

However, even during the latest episodes of emerging market turmoil, spreads in sub-Saharan Africa have moved less than those of other emerging markets that are paradoxically deeper given they are in general more liquid markets.

Do you think countries like Nigeria and South Africa should be defending their currencies and propping them up?

Not necessarily. If there are currency pressures, this can be due either to global factors such as a slowdown in China, falling commodity prices, tapering and tightening in the US; or it could be due to poor economic policies that are more internal.

If the currency pressure is due to global shocks, then maybe it's debatable how much you want to resist it, especially if you do have a current account deficit like South Africa.

But do you let the currency fall gradually --an orderly fall is part of the adjustment process--or risk letting the currency go into free-fall--which will be risky?

I would not use the reserves to prop up the currency. If you want really to slow down the rate of currency depreciation, probably tighter monetary policy is the more appropriate response rather than wasting precious reserves to try to prop it.

But in a country like South Africa where growth is already very low, excessive monetary tightening is probably undesirable.

To add to the problem, interest rates generally in Africa are already extremely high, which makes life very difficult for SMEs and those who want to invest.

Yes, access to finance is an issue throughout the continent especially for SMEs. Larger corporates have access to international capital markets. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Nouriel Roubini: Africa Has Come as a Positive Suprise
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.