A week before the US approaches a deadline to raise its borrowing limit concerns are already mounting that its default would heavily batter emerging markets economies including Africa.
Last night, International Monetary Fund (IMF) head, Christine Lagarde, told News Daily:”…there will be very negative consequences outside of the US economy.”
The US administration is edging closer towards the October 17 deadline to increase the $16.7 trillion debt limit or face running out of funds for the payment of all its bills.
Jim Yong Kim, the President at World Bank, was quoted on News Daily as saying: “The impacts are going to be severe on the developing countries.”
Many of the world’s fast-growing economies are located in sub-Saharan Africa. These economies are in the top 10 of the fastest growing economies in the world. The continent has become one of the world’s most lively economic growth zones driven by a growing middle class.
The IMF’s latest forecasts have revealed that growth throughout sub-Saharan Africa will surge from 5 percent onwards from this year.
Dr Jack Rasmus, the author of “Obama’s Economy: Recovery for the Few,” said the US’s non-payment of its debt will lead to currency volatility in emerging markets.
“This will cause a retreat once again in real growth in those markets,” Rasmus said.