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The International Monetary Fund has cautioned Africa about potential economic risks due to a slowdown in China's economy.
Africa Economy

The International Monetary Fund has cautioned Africa about potential economic risks due to a slowdown in China’s economy.

The International Monetary Fund is warning African countries of a potential decline in the regional economy and the potential impacts of China’s economic slowdown.

Over the last two decades, Africa and China have established strong economic relationships, with China becoming the leading trading partner for the continent. Africa primarily exports metals, minerals, and fuel to China, while importing manufactured goods and machinery from the country.

The IMF warns that China’s economic decline, aging population, trade disputes, geopolitical tensions, and the persistent effects of the COVID-19 pandemic are jeopardizing the partnership.

A businessman named Adan Ibrahim, who operates in Kenya and imports car parts from China, expressed the challenges of connecting with Chinese companies due to COVID-19 protocols. These included limited monthly visas, making it difficult to enter the country.

Ibrahim stated that there have been difficulties in reopening so far. Travel within the country has been limited, and there were strict health measures in place for those traveling to China. These challenges have affected both the economy and people’s health.

In December of 2022, China removed regulations related to the pandemic that had hindered the flow of goods and individuals.

According to Gerrishon Ikiara, a professor of international economics, the economic challenges experienced by both China and African nations impact their trade partnerships.

Iriara explained that when African economies suffer from issues like drought or other problems, it also has a negative impact on China. Similarly, if these issues occur in China, Africa also feels the negative effects.

He stated that it is crucial for both the Chinese and African economies to thrive in order to foster a stronger and more beneficial trading partnership.

According to Ibrahim, as China eases COVID-19 restrictions, the cost of goods has risen and they are left unsold.

He stated that the items we used to purchase at affordable prices before COVID are now three times more expensive.

The economic rebound of China has been hindered in recent times by a slow real estate market and low levels of consumer spending. The trade statistics of China indicate a continuous decrease in both imports and exports, reflecting a decrease in demand for Chinese products.

Ikiara stated that Africa must seek out new trade partners in order to promote economic growth.

The speaker suggests that if China’s economy is declining, Africa should broaden its trade partners and expand its imports and exports to include Asia, other regions of Africa, Latin America, and the U.S. They also emphasize the importance of finding alternative markets if there are issues with exporting to China.

The International Monetary Fund (IMF) is encouraging African governments to expand the variety of their economies, enhance trade connections within the region, and establish a positive business climate in order to foster growth for both local and global companies.