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African exporters of oil and ferrous metals suffer

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China flag — China's shift to consumption-led growth will have mixed credit implications for African sovereigns, flattening trade volumes of oil and ferrous exporters, while benefiting some exporters and exporters. Tourism destinations, Moody's Investors Service said in a recent report

" China is now Africa's largest trading partner with a trade totaling $ 114 billion in 2016, accounting for about 14% of the continent's total exports ". , Moody's EMEA Chief Credit Officer and co-author of the report – "Sovereigns – Africa, Trade Links and Investment with China present challenges and opportunities."

"But the demand for ferrous exporters will likely see their trade volumes stabilize, but the growth of Chinese investment in Africa is likely to reduce the continent's infrastructure deficit and to stimulate potential growth in some cases. "

Economic growth of about 6.5% expected in China over the next two years However, the Chinese economy is shifting from l 39; consumer investment, which will partially mitigate price increases.

In addition, competition from other international commodity producers Australia and Brazil are expected to intensify and erode market shares for African exporters.

Although the recovery in oil prices may lead to strong growth in value this year, the effect on prices is expected to decline according to Moody's average oil price estimates. Angola, the Republic of Congo and Nigeria are likely to face weaker demand for their exports to China than in the last decade. [19659008] Good News for Non-Ferrous Metals Although
In contrast, Moody's expects Chinese demand for raw materials such as copper, cobalt and copper. aluminum remains strong. These non-ferrous metals are widely used to produce cars, home electronics and transportation that can benefit from rising Chinese incomes.

The Democratic Republic of the Congo and Zambia will probably benefit as their copper exports to China account for more than half of their Chinese exports. Higher food exports to China will benefit agricultural exporting countries such as Senegal and Ethiopia.

Rising incomes in China could also lead to an increase in tourism to Africa. Although the share of Chinese tourists in Africa remains low – 1.5% of total Chinese outbound tourists – it has increased by 30% per year since 2012, the highest rate in the world

South Africa, Mauritius, Morocco, Egypt, Kenya, Namibia, Cape Verde, Botswana, Tunisia and Tanzania are the most competitive tourist destinations in Africa and will probably benefit from an increase in the number of Chinese visitors

& nbsp; Chinese investment reached 5% of foreign direct investment in Africa in 2016 2010, and if investment growth is maintained at half the current rates, Chinese investment would reach $ 100 billion; by 2020.

70% of China's investments between 2000 and 2015 focused on infrastructure. deficit, particularly in the energy and transport sectors, and stimulate potential growth under certain circumstances.

The report is available on www.moodys.com.

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