By Alec Hogg
America remains by far the biggest global economic power, with GDP at current prices of $27 trillion of the world’s total of $105 trillion. The closest rival is China with $19 trillion trailed by Japan and Germany with a touch over $4 trillion each. At home, SA’s GDP is $400bn, ranking it 36th among all nations, just 1.5% of the USA.
Put another way, just over a quarter of the value of all global economic activity occurs in the US, a country which houses 331 million, or 4% of earthlings. How so? Warren Buffett points to American Founding Fathers creating a structure of self-governance that still provides the most efficient system of distributing foods and services.
___STEADY_PAYWALL___Revisiting the latest data from the International Monetary Fund provides context, especially as we head into SA’s big day with the gathering of the BRICS (whose combined GDP, by the way, is less than America’s). The data also suggest growing momentum towards US economic isolation should concern many, especially Beijing.
Stanlib chief economist Kevin Lings shared the image above showing how multinationals are making dramatic changes to their supply chains – rapidly moving production plants closer to the end consumer. This decision stems from hard lessons learnt from Covid; Russia’s invasive war; and, of late, US/China tension.
The most obvious loser of this growing trend is China, which for decades has served as the “workhouse” of the Western World, and more particularly, the USA. Lings reckons “China’s role as the world’s dominant low-cost producer is changing. The expansion of BRICS into BRICS+ is likely to exacerbate ‘fragmented globalisation’.”
In this fractured world, South Africa’s big opportunity is to carve a neutral position – essentially find a way of playing all sides. Doing so opens the way to sell products to both the West and East. Watch Cyril’s moves closely, and you’ll appreciate this is very much his strategy. That said, with BRICS expanding, having the inside track ain’t bad.
Sterkte
Alec
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