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Gordhan: Economies sliding on EU crisis

Dec 02 2011 10:27
Johannesburg - World economies are sliding as a result of eurozone debt problems and failure by European leaders to make the right decisions to resolve the crisis will have massive consequences for the global outlook, said Finance Minister Pravin Gordhan.

Gordhan reiterated during a debate recorded for the BBC World Service's Business Daily programme that the rapid flow of capital in and out of emerging markets as investors fretted over the crisis was having major disruptive effects on their economies and currencies.

"What we are now having is the sinking developed world which is pulling the rest of the world down, rather than managing the situation," Gordhan said.

"So all of our economies are now sliding, whether we are in China, in Brazil, in India or wherever we might be, and that is going to have massive consequences in terms of the overall global outlook."

On Wednesday Gordhan told a media briefing that South Africa hoped Europe, its largest trading partner, would increase its bailout fund and reassure global markets about resolving the debt crisis.

South Africa has cut its 2011 growth forecast to 3.1% from 3.4%, partly due to the crisis.

"European leaders... don't seem to have the political capacity to both manage their own backyards on the one hand, and ensure that they don't damage the rest of the world on the other hand," Gordhan said during the BBC debate to be aired on Friday.

He urged that individual countries' interests should take a back seat to mutual global interests in discussions over the crisis.

"Otherwise we are forsaking all the wonderful opportunities we have to put billions of people on a better footing in terms of their lives and create a situation where we have a really depressing decade ahead of us," said Gordhan.



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