She delivered an update on the global economy, particularly in light of the emerging protectionism trend in the US and Europe, at the Investing in African Mining Indaba in Cape Town.
Moyo is bearish on US growth under the Trump administration over the next few years. She expects the US to be in a recessionary environment by the end of 2017, with three interest rate hikes this year. While the strong dollar should help exporting companies, border taxes and protectionism could put them in a bad situation, she says.
She points out that America has gone the protectionism route before, which in fact stunted economic growth. “In the Great Depression, the US became very aggressive about protectionism with the introduction of the Smoot-Hawley Act on American imports. Historians agree that this led to a slow recovery during the 1930s.”
However, Trump’s premise that American jobs are being lost to immigrants is faulty, because it seems that technology is the primary culprit. It’s effect on the jobless underclass is another challenge, Moyo says.
“Automation could drive costs down, but how does it affect people?” she asks. With projected population increases if this situation is mismanaged it could lead to generations of under education and poverty.
Returning to the question of immigration, Moyo says there are 65m refugees around the world at present. The highest this figure has been since World War II. The problem, she explains, is that the global community has never set up an agency to deal with the situation.
“The disorderly nature of the immigration issue will become much more virulent, especially around employment,” she says.
In terms of Europe, she says there are elections coming up in number of countries this year including France and Italy, and the implications of protectionism remain to be seen in these markets.
The Investing in Africa Mining Indaba takes place at the Cape Town International Convention Centre from 6-9 February 2017