Tuesday, October 14, 2008

World economic turmoil highlights value of Ibsa trade links

The current international financial crisis has increased the importance of trade and investment opportunities between the three member countries of the Ibsa Dialogue Forum, namely India, Brazil, and South Africa. This was the consensus among key business leaders attending the third Ibsa Business Summit in Delhi on Monday.

"Ibsa is critically important for South African business," affirms Business Unity South Africa CEO Jerry Vilakazi.

"The global economic crisis emanating from the US, and now manifesting itself in Europe, illustrates the potential that South-South cooperation offers. South-South cooperation is even more important now, due to the crisis.

"The three countries have been isolated from the present crisis, not because of our trilateral trade, but because none of our three countries allowed easy credit. I think the significant thing about this global crunch, which will affect us in the medium term, is how we continue to insulate ourselves - by increasing our trade with other South countries, and especially Ibsa."

"All three Ibsa countries are going to show positive gross domestic product (GDP)growth this year," highlights Confederation of Indian Industries (CII) Latin America committee chairperson Madhur Bajaj.

"While there will be slowdowns, we are far from a recession in any of the three countries. That shows their strength. The current financial crisis will be both a disadvantage and an advantage. The drying up of international credit will be a disadvantage."

But the crisis is likely to stimulate trilateral trade and investment, as well.

"India is partially insulated - we have lots of domestic savings. What is important for each of these countries is their internal markets. These have meant that we have not been dragged down by the US and Europe."

The Indian Finance Ministry forecasts that the country will return to 9% GDP growth in the second half of 2009, and in 2010. The country is expected to grow at between 7% and 8% this year.

The Ibsa countries can now engage trilaterally, because of the international financial crisis. This is the view of CII DG Chandrajit Banerjee. "This is because the three countries are not so affected by the global downturn. India remains adequately insulated; the conservative regulatory framework in Brazil ha shelped that country, and South Africa, too, is one of the fastest growing countries. So it is natural for us to collaborate in terms of trade and investment. We make better trade destinations for each other, as this insulates us from the global tremors at this time."

A South African Business Forum was opened in Delhi on Sunday evening, composed of South African companies already operating in India or planning to enter India. "It will alllow them to exchange information and experiences," says Vilakazi.

The Business Summit is one of the major activities in support of the ihird Ibsa summit of the three countries' Heads of Government.