African the full year was especially apparent in

economy is not shielded against the international financial crisis due to
the financial fragility of the productive sector, which is due
to its excessive exposure to foreign exchange derivative instruments. The
companies used a process of defense of margin of profit in the face of the
continuous process of exchange appreciation evidenced in the last two years,
leading to a fall in the companies’ operating income (Schoenmaker, 2013). We
can therefore say that the companies substituted operating income for financial
income. In addition, a second factor that contributed to this exposition
was evidenced: the generalized optimism of the market, optimism is sanctioned
by the Federal Government. It was in this context that companies reduced
their security margins and, under this approach, we assert that the shielding
myth ignored the fragility of the nonfinancial private sector. The African
crisis is endogenous, due to the growing financial fragility of the private
sector and the exposure to foreign exchange risk.


African Scenario
Regarding Financial Crisis

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The South African economy showed a sharp
decline by the end of 2008. A broad cyclical the decline has been noticeable
since the end of 2007, but in September 2008 the world became global financial
crisis is bursting out and the world economy is scouring. The South African
economy recorded its first quarterly decline (-1.8%) in ten years in the fourth
quarter of last year and the annual growth rate decreased to 3.1% – after
growth of about 5% per annum for four consecutive years calendar years.
Although shortages in electricity supply during the first part of 2008 were
severe disruption caused in economic growth, the decline in economic activity
for the full year was especially apparent in the growth rate of real household
consumption, which decreased from 6.6% in 2007 to 2.3% – an indication that the
level of real consumer spending in fact during the second half of the year
shrunk (Duran, & Garcia-Lopez, 2012).

The contraction has worsened during the first
quarter of 2009. The growth rate in real fixed investment (the private and
public sector jointly) decreased from above 16% in 2007 to 2.6% in the first
quarter of 2009. To further rub salt into the wounds, exports sharply declined
in the last quarter of the year and the first quarter of 2009 in response the
severe global economic recession that was unfolding. Businesses had to storm
turbulent water in recent years and with unstable economic conditions worldwide
remain uncertain. Global real GDP has been estimated an annual rate of 6.7%
during the fourth quarter of 2008 shrank and 5.6% in the first quarter of 2009.
The advanced economies took the lead with the economic downturn operations. The
global economic recession has been synchronized and the worst since the Second
World War. World trade and money flow fell sharply, while commodity prices
dropped and production and job losses continue to increase.


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The adverse economic consequences are worse
in developed economies, although emerging economies are also affected by the
close trade and financial ties what exist the commodity price-driven inflation
cookie that hit the world between 2006 and 2008 has been spectacularly reversed
and around the world are central banks, fiscal authorities and multilateral
financial institutions struggled to combat deflationary tendencies. From March
2009 the global economic crisis has apparently stabilized and has optimism begins
to increase that a recovery is at hand (Yan, et al., 2012). While the South
African economy was somewhat hedged against the primary driver of the worldwide
financial crisis (the burden of the US subprime financial soap bubble), it is
fully exposed to the indirect consequences of export demand and prices as a
result of global recession conditions and the contraction in capital flows.

The local manufacturing sector has a
particularly strong decline experienced the last quarter of 2008 and business
indices in the sector in the first quarter of 2009 dropped to the lowest level
in a decade. While growth in real consumption expenditure slows down and retail
business has shrunk, is a measure of resilience in the first quarter of 2009
detected. Prospects are, however, clouded by the further reversal of production
and threatening job losses. A number of positive fundamental factors improve
prospects for South Africa, which is slightly different would be worrisome
(Kupakuwana, 2012). In the first place, South Africa’s banking sector has an
insignificant direct exposure to the subprime financial crisis, it is well
capitalized and is expertly regulated. While the rand exchange rate initially
experienced a setback, its resilience in the reflecting the global financial
crisis as well as the return of inward equity investments in the first quarter
of 2009 promised.

Thirdly, South Africa’s public sector has
already begun with an aggressive firm investment program that will counteract
some of the negative trends in the private sector. As encouraging as these
fundamental factors are, the magnitude and intensity of the prevailing risks
caused by the global financial and economic crisis are profound. For South
Africa, these risks concern exports and the availability of foreign capital
around the finance large current account deficits.

The internationalization of the financial
system has substantially changed the nature and deter- minutes the global
economic dynamic: the combination of deregulation of markets financial and financial
innovations – such as securitization and derivatives – free mobility of capture-and
such flexibility and volatility of exchange rates and interest rates have on
the one hand, limited to action of domestic macroeconomic policies and on the
other, was responsible for both the frequent crises balance of payments in
emerging economies, as the liquidity and solvency crises, as the recent
international financial crisis. This process of financial globalization, in
which financial markets are integrated in such a to create a “unique”
world market of money and credit, has, in turn, before a framework in which
there are no monetary-financial rules and stabilizing foreign exchange and
instruments traditional macroeconomic policy become increasingly insufficient
to contain the financial collapse and currency) worldwide, resulting in
effective demand crisis. JM Keynes, in his General Theory of Employment,
Interest and Money 1936, already called the attention to the fact that, in
monetary economies of production, the organization of financial markets CIAL
faces a trade-off between liquidity and investment: on the one hand, they stimulate
the development of productive activity by making the most liquid assets,
freeing therefore the investor irreversibility of the investment; on the other,
it increases the speculative gains possibilities (Al Amine, 2016).

At- rather, to establish a connection between the
financial markets and real economy, Keynes, in Theory General, wrote that
“the position is serious when enterprise becomes a bubble on the
speculation. When the development of the activities of a country becomes the
by-product of activities of a casino, the job is likely to be sloppy. “Going to
meet Keynes, today, the action of the global players in a more market integrated,
makes the financial markets should be converted into a kind of big global
casino. Speculation, in a global economy, disruptive character has not o


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