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Johannesburg - Developing countries will feel increasing pain as growth in wealthier countries stagnates.
The ripple effects of a recession in the US and Europe, together with slower growth in China and India, could hurt resource exporters like South Africa. But the full impact will be felt only next year.
After the World Bank announced that it had recently adjusted its growth forecasts for developing countries downwards, Germany admitted on Thursday that it was in a recession. The US, British and Irish economies were, according to their authorities, already contracting.
Germany's announcement might indicate that in the rest of Europe conditions are worse than previously expected. The country has the largest economy in the region and a large part of its trade is with its neighbours.
"This country depends heavily on trade with the rest of Europe," said Kruger International economist Ulrich Joubert on Thursday. A recession in Germany could therefore point to difficult times in its neighbouring countries, even if official statistics have not yet been published.
France and Italy, he reckons, are also on the brink of a recession. This is likely to be confirmed when the latest statistics are published.
With markets in the richer countries under pressure as growth contracts and even becomes negative, China and India- in recent years the growth engines of the global economy - are struggling to maintain their vigorous growth.
China recently announced a massive stimulatory package of some $586bn, with which the country plans to keep its economy growing. The rest of the world is holding its breath because China growing at a rate of less than 8% could cause resources prices to fall even further, says Joubert.
"India, in turn, depends more on services - and especially on supplying them to the financial sector in London. The problem is that the crisis has seriously impacted the British financial industry," he added.
India's growth could therefore be choked by problems in Britain.
South American countries trade strongly with the US. Even if most are still growing, things there could become more difficult next year, as well, as US demand declines further with the recession
- Sake24