The G7 – a group of world leading economic countries, particularly the United States, Canada, Germany, France, Italy, Japan, Britain, and the European Union. The finance ministers and central bank governors of these seven greatest economies meet every year to discuss economic issues and marginally highlight on other related issues.
This year, G7 member meeting tagged as the G7 summit was held at Ise-Shima, Japan. One of the critical issues on the table during the summit was global weakening economies with recent fall in oil prices and low production rate as compared to demand rate. Conversely, some economies are performing really better than other economies of equal standards which also calls for economic inter-boundary alliance and resource utilization having the realization of the recently launched Sustainable Development Goals in mind.
At the summit, G7 members complained about the uncomfortable state of their individual companies. However, Japan’s deputy chief cabinet secretary mentioned that there are existing opinions that do not regard the current economic situations as a crisis.
Facing reality, the need to strategize as a group to combat climate connoted global challenges such as famine, poverty and clean water is still a challenge for the G7. The SDGs which has 169 targets and categorized into 17 sectors needs to be achieved earlier than 2030. Global security and peace is still a headache for world leaders (G7 inclusive), a stabilized economy for the G7 will give hope for a quick realization of the SDGs as most of the G7 members – U.S.A, Canada, and E.U, are known to show financial commitment towards projects that focuses on the global goals. The United State Agency for International Development (USAID) is currently funding thousands of projects targeted on the achievements of the SDGs. A poor economic state for these countries will mean a reduction in funds available for such projects.
Economic State of G7 Members;
A predicted economic performance report released by the International Monetary Fund just last month predicted a flat economic growth of 2.4% for the United States and a 2.5% growth next year. Additionally, it mentioned that the U.S economy is anticipated to grow faster than its fellow G7 member nations. Britain on the other hand will experience a 1.9% growth or lesser growth due its ongoing possibility of opting from the European Union. The report did not look good for the 2016 G7 summit host, Japan’s economic growth is expected to be o.1% next year as it stands at a growth of 0.5% this year. Germany and France are awaited to experience good gains next year while Canada and Italy are expected to grow pretty well both this year and 2017.
What does this mean for Business in Africa?
With falling oil prices, low production rate for world manufacturers such as EU, and a decreasing economic growth for countries such as Japan and Britain, importers and mega traders in Africa will be affected through many economic challenges including inflation and monopolization of products with manufacturing restricted to some countries. Unstable exchange rate for poor economic performing countries in Africa – particularly countries that depends on provision of services for development rather than manufacturing/production. Conversely, this could strengthen some countries like Nigeria, South Africa and some North African countries. Additionally, development in tropical Africa could be affected, if international aid ceases or decreases.
Left to Right: European Council President – Donald Tusk, Italian Prime Minister – Matteo Renzi, German Chancellor – Angela Merkel, U.S. President – Barack Obama, Japanese Prime Minister – Shinzo Abe, French President – Francois Hollande, British Prime Minister – David Cameron, Canadian Prime Minister – Justin Trudeau and European Commission President – Jean-Claude Juncker in Kashikojima, Japan, May 26, 2016.
Picture Credit: Foreign Ministry of Japan via Getty Images