Emerging world needs a change of captains

SOME five years ago, stories of political risk surrounded Europe and the future of its relatively young union. Portugal, Ireland and Greece dominated headlines as their politicians fell over themselves trying to appease Germany and Brussels.

At the height of the European crisis, the emerging world had just hosted a successful soccer World Cup in South Africa and the baton for the next showpiece had been passed to a Brazil still very much in love with its president, Lula da Silva, the man born in a mud hut who had managed to lift his country to become the world’s eighthlargest economy.

But our time — and by this I mean that of South Africa and other major emerging-market countries — was always coming. It always was.

The “Africa Rising” narrative was well entrenched, boosted by Chinese investment that wasn’t interested in who its political partners were, and a flood of dollars from the Federal Reserve.

Nigeria had assumed its place as not only the continent’s biggest economy, but its most promising, given its demographic advantage. Angola was another one of those economies singled out as a bright spot on the African horizon.

Due to power constraints that began as far back as 2008, and rising labour tensions, South Africa wasn’t faring too well against its sub-Saharan peers, but compared to most of Europe, we were much better placed.

Questions about the health of the emerging-market countries only started being asked when it became evident that the Chinese growth model would have to be adjusted. After all, there are only so many skyscrapers that a country, even one as big as China, can build, and only so many highways.

Up until that point, Chinese growth was in double-digit territory, and the expectations were that there would be a soft landing.

With growth in China now below 7%, we know that was quite optimistic. And the country that has always had the air of being in control of everything economic is in panic mode. It was evident last year in its meddling in the Shanghai stock market.

That panic has spread to the political space, with rising reports of a more paranoid Beijing intent on squashing any signs of dissent.

The management of domestic politics has become the central theme for most, if not all, emerging-market economies. It’s the European situation all over again.

The South African and Brazilian presidents have been in a battle for their survival. (In truth, our president has been in one since June 2005, when President Thabo Mbeki fired him as his deputy.)

Malaysian Prime Minister Najib Razak is embroiled in a corruption scandal. Were it not for the security issues that dominate the region, Turkey’s

The SA and Brazilian presidents have been in a battle for their survival

Recep Tayyip Erdogan would be faced by more difficult economic questions.

Russia’s Vladimir Putin has also had the convenient distraction of Syria, without which growth in the world’s one-time superpower would be crippling to his “Soviet”-era ambitions.

On the continent of Africa, its big men are as grouchy as ever as the easy money all but dries up.

And over the coming weeks and months, we are set to live through some trying times in the emerging world as a whole.

Of the leaders of the world’s major economies, it is only Germany’s Angela Merkel who remains from the pre-2008 world. Almost a decade later, the emerging world is also in need of cleaning house.

derbyr@sundaytimes.co.za

@ronderby