The world over is looking at ways to sustain their domestic economy, the main tool is/are stimulus packages designed to put money in peoples pocket. The rational is simple, money in ones pocket means people will spend - this maintains demand for goods and services thereby sustaining the level of economic activity in country.
As an economics major studying from my apartment I came across the Solomon Islands and the work your government is doing to keep your country going.
What is probably important to consider is the international market - when international demand slows the domestic economy will suffer. It is always important to understand what is going on in the international commodities market - same is true for countries in Africa.
When there is a slump in international market demand production levels naturally decline in domestic markets - if market forces are at play. But when you inject government spending to crop up the commodities sector you create an artificial level of growth that may not be supported by a ready market. If there is a big enough local market that can absorb the rise in supply than that is probably ok - but we all know that when there is excess supply price will fall - not good for farmers.
I think the global community needs to support each other, if other governments are injecting funds to stimulate their commodities sector perhaps governments in international markets should do what they can to maintain the level of international demand for such commodities. There are many economic tools at their disposal.
Otherwise what will certainly come is a global recession, followed by a collapse in certain commodities trading - a disaster for developing countries who depend on such markets.
Stimulating the global economy
Disclaimer: The views and opinions expressed in this letter are those of Minenhle Kyle and do not necessarily reflect the official policy or position of Solomon Times Online.
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