Allianz Research: Africa, Americas Had Better Brace for a “China-Less Recovery”

China is turning inwards and will slow its economic engagement in emerging markets in Africa and Latin America in the post-COVID-19-era, according to new analysis from the research arm of the German financial services giant Allianz.

The report was written by three senior economists covering Asia, Europe and the Americas and should serve as an important warning to policymakers in Africa that they should not expect the same steadily rising trade volumes and access to Chinese financing that they’ve become accustomed to over the past ten years.

“The tide turned in 2020 (and even before the Covid-19 outbreak), with increasing repayment difficulties of debtors and debt renegotiations,” said the authors. “Ongoing partial defaults and payment deferrals have certainly paved the way for a slow decline in Chinese outbound lending in the coming years,” they added.

What a “China-Less Recovery” Will Mean For Emerging Markets in Africa

  • CHINA’S GROWN WEARY OF AFRICA’S DEBT DRAMA: “China is likely to gradually disengage from the debt-financing of low- and middle-income countries amid on-going repayment challenges.”
  • AFRICA WILL HAVE TO GO SOMEWHERE ELSE FOR FINANCING: “These countries would have to secure funding from elsewhere (official international lenders and financial markets) to refinance the large amounts of Eurobonds maturing in 2022 and 2023.”
  • CHINESE OUTBOUND INVESTMENT TO SLOW: “The structural slowdown of the Chinese economy and large stock of debt domestically mean that outward investment is likely to slow in the coming decade.”

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The post Allianz Research: Africa, Americas Had Better Brace for a “China-Less Recovery” appeared first on The China Africa Project.



source https://chinaafricaproject.com/2020/11/25/allianz-research-africa-americas-had-better-brace-for-a-china-less-recovery/?utm_source=rss&utm_medium=rss&utm_campaign=allianz-research-africa-americas-had-better-brace-for-a-china-less-recovery

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