IMF Working Papers

Rising BRICs and Changes in Sub-Saharan Africa’s Business Cycle Patterns

Author/Editor:

Oumar Diallo ; Sampawende J Tapsoba

Publication Date:

February 14, 2014

Electronic Access:

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Summary:

This paper assesses the extent to which Sub-Saharan Africa (SSA)’s business cycle is synchronized with that of the rest of the world (RoW). Findings suggest that SSA’s business cycle has not only moved in the same direction as that of the RoW, but has also gradually drifted away from the G7 in favour of the BRICs. Trade with the BRICs turns out to be the strongest driver of this shift. Much of this impact unfolds through aggregate demand impulse from trade. As fiscal policy stances in SSA and the BRICs are not synchronized, they have not caused cyclical output correlation between these two groups of countries. Also, financial openness, which is at a very early stage across most SSA countries, has acted as a neutral force.

Series:

Working Paper No. 2014/035

Subject:

Business cycles Economic growth Exports International trade Plurilateral trade Trade balance Trade relations