Posted by: Armel | October 15, 2008

Decoupling Theory: Is It Over ?

                              

The IMF trough Dominique Strauss-Kahn  said some time ago that decoupling theories wouldn’t work. If the assessment was made after analyzing the curve of the downturn this year, I think that’s an obvious conclusion to make in the face of a recession in the West.

I think decoupling as I advocated it here works as another diversification strategy during slowing growth or relative stagnation. But the idea that Decoupling was going to continue to provide the same returns on equity (on a strict % basis) during periods of recession or depression in the US & Europe, is simply not feasible to begin with. As we know during hard times like these, the access to credit and capital becomes expensive and by simple math, given the expected lower growth out of emerging markets, it wouldn’t make sense to promote an all out Decoupling strategy in these conditions.

So i agree with DSK and OZ for now, let’s just say it’s a wrap until the next Bull period when the markets once again want to balance risk and diversify through emerging economies. But how long before that happens again?

Armel Njeunou

Advertisements

Responses

  1. […] Investment opportunities spring up across Africa – America.gov Is the Decoupling Theory dead? – Armelpost Africa the last Infotech frontier- GigaOm Farafina could use a better picture of me. Don’t […]


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

%d bloggers like this: