 So, welcome to our year three of our WEF CNN Emerging Markets Roundtable. As you can see, we have a splendid representation from countries big and small, from Africa, the Middle East, and Europe, and superb insight from the corporate world in Carlos Combe, from Renaud-Nissan, and two of the best in terms of economic analysis with a keen eye towards the emerging markets, and Nouriel Rubini and Minjou of the International Monetary Fund, and before that, of course, from the Bank of China. So, in the past few years here in Davos, we've often talked about the two-speed Europe, the northern half of Europe accelerating and growing, while the southern half of Europe struggles and the core growing below historical norms. Is that what we're seeing for the first time in the emerging markets after a decade of blistering growth? In Far East Asia, China is expected to grow 7.5%, 7.7% this year. In Africa, Nigeria, according to the World Bank, is 6.7%, and in Southeast Asia, the Philippines growing during the rebuilding phase after the horrible natural disaster at 6.5%. Then we see large countries such as Brazil growing about a third of where it was three years ago, Russia, half of its recent run rate. So those who have not reformed enough before the U.S. Federal Reserve began talking about tapering in May of 2013 paid a huge price for that. The $64 billion of capital pulled out of emerging markets between May and August of 2013. So where does that leave us today after a phenomenal start to the century interrupted by a Western-led financial crisis? As we sit down tonight, we saw the Argentinian peso hitting a new 12-year low. The currency in Turkey, the lira has been under pressure for the last 10 trading sessions as well. As many of these countries move into the middle class income status, where can they generate growth in the future? So all this success has led to a rise in per capita income, and as we found out over the course of the last 12 months, they're not shy about hitting the streets and protesting if they don't think that their governments are doing enough. So I think a good place to start is with the news that we're seeing today. Let's start with Nuriel Rubini, if we may, and tell us what you think the sell-off that we've witnessed quite severely in the last 24, 48 hours in Argentina is telling us about the economic fundamentals and how the market is evaluating certain emerging markets vis-a-vis others. Well, it has been a confluence of a number of factors. First of all, Argentina has wrong macro policies that are bleeding reserves. They finally let the currency move downward. That happened the same day when the China numbers about manufacturing activity became weaker, and we've had now elements of political unrest to different degrees from places like Ukraine to Thailand or even in Turkey. So it's like a perfect mini storm, but I think the broader picture is one in which China is slowing down. The Fed is tapering. The commodity supercycle is over. Many of these emerging markets did not do structural reforms in the last decade, and a number of these emerging markets had slippages of monitoring fiscal and credit policy when money was cheap at zero policy rates and was going into emerging markets, and now the market pressures are emerging. Now longer term, the fundamental might be sound, but we've realized that there are also fragilities within the emerging market world. Minjoo, from the International Monetary Fund, there's an obvious question here. Do you step in to assist Argentina at this juncture? This is not an economy that's been or a leadership very cooperative with the International Monetary Fund or the World Bank. Are we at the crisis point, would you suggest? Well, we were more than happy to help, and this is very clear, but as you know, we don't have official dialogue since year 2004. We haven't done any Article 4 consultation with Argentina now, things like that. So we will firmly rely to enhance our official dialogues with the authority to help us to understand the situation better and also help them. Of course, we monitor the situation very closely and we are very careful to assess the situation as well. What would you suggest is the key lesson learned here, though, if you didn't reform over the last decade and there's not that easy money that's left over anymore, that you pay a huge price? I think Noria made this very clear. There are two things that happen if the emerging market is key important. The first issue is external environment has changed. The advancing economy do change the growth rates and also the liquidity market, the easy financial flow is changing now. So you have to think about how do you balance your external financing and internal need. The second issue is after quite a year, the strong growth in many emerging markets, you have an internal structure issue now. In some countries, the loans well is too strong and the structure issues is there too. And you have to carry on the reform. This is very clear. If you don't do that, you will run into a very difficult situation. That's very true. Deputy Prime Minister Babajan, the Turkish leader has been under pressure for the last 10 trading sessions hitting a new record low. There's always been that vulnerability with Turkey because of its current account deficit. Are we tumbling into a crisis that's going to keep the pressure on Turkey in your view? Well, what's happening in Turkey mostly is a repricing process. Not only just because of the Fed's tapering, but also the recent political events has triggered some market volatility. But when you actually look at the capital flows, there has not been a capital outflow whatsoever. It is mostly capital markets, bond markets. There's trading going on, revaluation is going on. But people who have been investing in Turkey are actually keeping their investments, which is, I think, an important difference from other cases. What we have been doing, especially since 2011, was attracting long-term capital but giving some intended volatility so that the short-term capital was not attracted to the country anyway. So that, I think, is now playing a very important role that people who have already long trust in the country is still there and they have a long-term view, which is important for us. After what you see in Argentina and the pressure on your currency, what action do you take immediately to try to stop a contagion effect? First of all, it's a floating exchange rate. So we don't have any committed exchange level or whatsoever. And our central bank is doing whatever is needed, especially during times of volatility. And they have instruments in their hands and they are using these instruments in an independent way to do what is necessary when it is necessary. Min, you wanted to follow up on the comments on Argentina? No, I think on Turkish issues. And I think the key issue is, as Vice Prime Minister explains, Turkish has a flexible exchange rates, which has served the economy very well in the past few years. So the market is just adjusting. This is the process. I think that the key issue matters today is whether the monetary policy have to take into the situation, particularly on de-inflation of the inflation side in the near future issues. I think that's the key issue. Otherwise, the market works. Yeah, this is just a adjusted process. My name is Spinisher, I'm most of EC. Europe's been in the doldrums and is starting to come back along with the rest of the global economy. What are your perceptions of what we see in the emerging markets now? We entered a new normal where they're still growing, over 5% in 2014. But investors need to be more discerning about where they put their money as a result of some of them not reforming and slowing down. It's true that I was in another panel last year. It was about Europe being the problem. Now, the view on Europe is more positive. But when I look at emerging markets, of course I see a slowdown and I see also structural factors and the need for reform. And obviously, there are also the consequences of the tappering. But still, I believe that there are structural changes which lead us to optimism in the long run. And especially the emergence of, I would say, a new middle class. Our treasuries say that if you look at 2030, the number of people who live with more than $30 a day per day will be about 2 million. And this will change also the habits, the way of consumption. And it will offer also new opportunities for jobs and high-quality goods. So, well, we've got to face the situation. We've got to go on with reforms. But, well, still, there is there a source of growth for the rest of the world and for the emerging countries themselves. Carlos Ghosn, you have plants in at least a dozen emerging markets. You're not looking short-term with some of the volatility. Does it concern you that some markets have opened up dramatically and this doesn't alarm you that we see the slowdown and the BRICS economies in particular? No, not at all. I mean, there is no developing market, no emerging market which has been growing constantly with no surprise. You have to be ready when you invest in the emerging market to ups and downs. What is important is not the next three months or the crisis of yesterday or the volatility of next week. We invest for the next 20 or 30 years and you assess the potential of the country where you are investing based on the fundamentals of the country. And the main fundamentals for us from one side is how far are you from a similar country in terms of motorization? And from the other side, is policy or whoever is in power or can be in power taking some fundamental steps, particularly in terms of infrastructure and education, which are obviously the two most important elements. I can give you a very simple example happening today. You take Nigeria. It happens that I met with the president of Nigeria yesterday and you take Nigeria, 170 million people. And if you have to compare Nigeria, its size, its wealth, its resources to another emerging market, I would compare it to Brazil. Or I look at Nigeria, I see Brazil maybe 20 years ago. In Brazil today, you have 200 million people and the car market is 3.6 million cars. 3.6 million cars. And it's far from its potential because you have 200 cars per 1,000 residents in Brazil. While in average European country, you have 500 cars per 1,000 residents. When Nigeria today, in 2013, sold 52,000 cars. 52,000 cars compared to 3.6 million. That means no matter what you do, you know that you're going to invest in Nigeria because this market can go only up with a tremendous growth. So I think, yes, we have to be very careful about the volatility on the short term. Yes, it worries us, but when you go in, you know that you're going to have ups and down and you need to take a look to the trend. And the trend in all the emerging market is really very positive. President Kagami, your small economy in eastern Africa averaging growth of 7% for the better part of the last decade. Now, how do you get the next wave of growth in east Africa? We're lowering barriers amongst countries where you can sustain that level of growth and see a new trade block emerge from the eastern half of the continent. We have been able to grow and there are prospects for continued growth, not only for what is happening in the country itself, but to leverage the scale in terms of regional integration. We have the east African community which has 135 million people. And we have already formed a customs union. We have a common market. We are moving towards a monetary union and we're even looking at a political federation. So this plays to the advantage of what even Rwanda as a country on its own is able to achieve within this larger community. A question for the panel, Min, before I pick up here, but I want to put a question for the whole group and I'd love you just to chime in right across the board here. Nouriel, you can start us off. Would you suggest that we've entered a new normal for emerging markets? So we have to lower the bar in expectations for the next decade? Not necessarily. There has been a slowdown of growth in emerging markets because of some of the macroeconomic imbalances. But this was true that the last decade has not seen significant structural reform in many of these emerging markets. And now there is evidence that the potential growth of this emerging market may have fallen from 6% towards 5% or below. But if there are gonna be structural reforms then productivity growth can rise. You have still the demographic dividend and the growth can actually accelerate again. So medium term I would say you still have countries positively that are urbanizing, they're industrializing, there is a catch up of per capita income growth. There is a rise of middle class and a consumer society. Those are positives, but there are also some caveats. Many of these emerging markets reach middle income level but then they get stuck in a middle income trap. And paradoxically, these middle classes become restless. In these emerging markets, those who are protesting in the street in Brazil are not the poor people in the favelas, is the middle class. Same thing in Turkey, same thing in India, same thing in Indonesia or Chile or Colombia. So once you reach a certain level of income but there is a middle income trap and reform do not occur, actually middle classes become politically restless and that's something of a new phenomenon. It's not the proletarians who are in the streets, is the middle class wants better services, more economic opportunity, more education, more public services. Deputy Prime Minister Babajan, this has been very pronounced in Turkey over the last year. It's not an easy place to govern anymore. People are demanding more from the government after all the growth and the doubling of the GDP of the last decade. Well, in Turkey actually what has been happening is not only our per capita GDP has been increasing very fast and it's now more than $17,000 PPP adjusted. It is half of Japan, 56% of the EU average. But also income distribution has become better and better. Our Gini coefficient has been dropping and across OECD we are the country which has the fastest Gini coefficient rate. And also fighting with poverty also helped a lot. So what actually our people would like to have is not just the basic needs and last year's protests for example were not because of people were poor. Most of the people on the streets actually were educated, young people, professionals and they have aspirations for different levels of needs. And I think that's an important test for our democracy and also recently we are also going through some tests for our rule of law. But we have also a very strong anchor which is the EU process. We're a member of Council of Europe and a candidate country to the EU and take the reference of the norms and the standards of the EU for our democracy, for freedoms and for rule of law. And that is helping us a lot and all these tests I think are important and we are just going to emerge as a stronger democracy and as a stronger country with a true rule of law. I think in emerging countries these are probably expected more or less but then if we are careful about what we want to do for the country and what we target for the long term these tests will be passed in a successful way. There's some that believe that the leadership has become out of touch with the people after all this growth in Turkey perhaps they've been in power too long and it's time for a change. You know the argument. Well, the current public opinion polls show that even after the most recent events show that still 47 to 48% of the people support the ruling party and the government. I think we are doing something right probably. That's why people still have that big of a support but of course we are the government of the other 52% of the population as well. We are aware of it and we are trying to be more and more inclusive and just try to understand the needs, aspirations, maybe fears, worries of every segment of the society and appeal to every segment of the society. Of course now that we have elections coming up just two months later we have the local elections then in July we have the presidential elections. Next year in June we are going to have the general elections. I think it is okay to expect some political noise throughout this process and a lot of what's happening actually recently I think has a lot to do with the approaching elections but still as long as I think we are able to communicate what we really intend and what we are really doing it will be quite okay. And also I think we are learning a lot from what is happening. Learning and also shifting our policies if necessary when necessary. Carlos, it would be good to get your response and share your candor with the audience. You have a plant in a country for example in Brazil. When you see protests what do you do as a chief executive? What's your response? Well I mean you don't have to respond to this because it's obviously not our area of concern. The fact that you have from time to time political instability doesn't mean it's bad for the economy. That means we've seen it in our sectors in many countries where political instability meant from time to time that the sales of cars were going up. Let me give you an example. Argentina has a record year of sales of cars in 2013 even though as you know there have been a lot of instability even economically. But if I would like to make a comment because you mentioned the new normal and maybe there is a new normal on emerging market but the new normal doesn't mean that your perspective goes down. In certain case your perspective goes up. Let me give you one example which has been taking place for the last 10 years is about China. For the last 10 years every single time I came here people say next year you're gonna see China's gonna slow down, it can't continue to this level, et cetera. And particularly for the car market. 2013 car market went up in China 14%. Not only it's the largest market in the world but it continue by far to be the engine of growth for our industry. So from time to time the new normal means we have to revise our vision of the potential of some of the emerging markets up not only down. Interesting. Finance Minister Mussavisi, can you share your thoughts on where France would like to see its bilateral trade and partnerships grow in the emerging markets? You have a history in Africa of course in the francophone countries but where do you see the opportunity for France in the emerging markets today? Of course everywhere. But you just mentioned Trinam is to go on just a minute ago obviously for the car industry and there are strong car industries in France. They are the future of this industry but also I'm convinced that Africa is a fantastic opportunity for the future and that the markets there will grow as fast and the population will grow. And this is a continent with more than 5% growth a year and we have very important reasons to believe that this will go on and that the potential for the future. You mentioned Nigeria versus Brazil is absolutely huge and this is why we call for our companies to invest there. There is no risk. Well there is a risk but it's a calculated risk. There is a huge opportunity. We must believe in the future of Africa. I believe in the future of Africa. In December there was a summit organized in Paris between France and Africa. Not only the Francophone Africa, all Africa and it was not only about security. We're involved in security. Mali, Republic of South Africa but also development and growth. And when I organized in Bursi our ministry a side event with 900 firms it was absolutely considerable. So there is a future there and we must be very confident. New normal, I don't know, but there are changes. But last word, it's important that there are reforms too in order to develop particularly communication, infrastructures and transport because it's the key also for going on with growth. Just to add a few sentences to what Pierre has said. Also South-South trade and South-South cross-investment is growing. In 2008, Turkey had only 12 embassies in Africa. Today we have 35 embassies. And our exports to Africa plus Middle East is now almost as high as our exports to the European Union as a whole. So that is also a new trend going on. So developing countries, trading and doing more with developing countries which is I think a huge potential which will grow. Who's showing interest in Rwanda President Kagami? Who are your number one investors? Who's knocking on your door now Mr. President to come into Rwanda in that eastern half of Africa would you suggest? We have many investors coming from the continent itself. We have a number of companies from South Africa, actually others from Nigeria, but now we are seeing many from Europe. It's United States. So it's across the globe that even from Asia, China has been also investing in Rwanda. But it may take this opportunity to say there are a number of things that are playing in the favor of the continent, especially I talked about integration, but there are also opportunities in the demographic structures as they exist. And coupled with continued reforms, we are seeing a future where Africa continues to grow. And of course, South-South cooperation as was said, but to more so intra-African trade which has been at a very low base at the moment is also playing out in favor of possible continued growth on the continent. Before I come to you Finance Minister, I'd like to pose a new question to the panel here. And so if we're gonna look at 2014 and start to categorize the greatest risk, how would you put them? Hariyal, to the emerging markets. Well, some risks are external and one is whether China is gonna slow down more, whether the Federal Reserve is gonna make a mistake by exiting QE or raising rates too soon, or whether maybe the correction of commodity prices is gonna become stronger than otherwise. And some of the risks are internal. I mean the fragile five India, Indonesia, Brazil, Turkey, South Africa have in common current account fiscal deficits, slowing growth, rising inflation, but also they've in common now election, parliament or presidential this year. Now elections are good because it has signed these are old country that were not democracies and now they are. That's very good news. And sometimes political change in the regime is for better policies, sometimes for worse policies, sometimes ruling party were doing well, are gonna be reelected. If you look at the spectrum of these countries, in India and Indonesia, maybe there'll be government change, maybe not in Turkey, Brazil and South Africa. In Turkey the current government has done many reforms, maybe the same powers, good news, and maybe in other parts of emerging market, regime change will be actually useful and it's not gonna occur in some of these countries. So I think that's another element of uncertainty, the political and the policy uncertainty. If you come to Davos 2015 men, what would you qualify or quantify as the biggest risk to the emerging markets? Well, I think we'll probably see both side stories. The first story is the emerging market still grows strongly. I think we'll start with discussion for this panel talk about the market volatility in Turkey and Argentina. But I think we should see the overall picture. Really the growth has been stabilized on the emerging market take proper policies and we forecast this year the growth risk for whole emerging market were 5.1% which is stronger than 4.7%. And this year the advancing economy grows rather strong from 1.1% last year to 2.3% which will help the export industry for the emerging market. And the domestic supply and investments also rather strong and they still have a space. So I would say overall the emerging market still have a great potential to grow. I think that's very important. And also although the emerging market growth is having slowed down, but the emerging market today still account 65% of global growth contributions. I think this is also very important. So I would like to give a little color to Carlos' business observations as a macro picture. I think that's the first issues. And after one year, how do we see that? I would say it depends on whether the emerging market will take the proper policy to do the reform, to do the adjustments. I think a few things are important to watch particularly this year. And first things you have to watch tapering, right? And I think tapering have a few different dimensions. The first dimension is the Fed, I believe would do a good job in terms of gradually move the liquidity out of the market in line with the growth and job and do the good communication is fine. But the second issue is we want to make sure the market will respond to the Fed policy. The main events tell us the market may not respond in the proper way to the Fed policy. So the emerging market have to watch carefully because particularly for the emerging market depends on the external captures. I think that's very important. The third issues were Fed doing the tapering, the interest rates were increased and we found the passing through rates is more than 100%. So the emerging market will feel the pressures in the second half. So they will increase their refinancing costs will transfer in some degree into the budgets. So I think the first issue is you have to look at tapering. If you do well, it should be okay for the year 2015. Number two, you should carry on the structure before. Rebuild the buffer's policy space. I think the issues Norio mentions are mentioned. It is what define who will be the champion for 2015 and who will not be there. I think this is a reform, adjustments and transform himself into the next stage is absolutely important for emerging market. I don't think this is a new norm. I think it's absolutely normal. It's normal because by definition, the emerging market is the process of learning as the Prime Minister says, a process of adjustments, a process of reform. So in that time, if external environment change as we see today, internal macro situation you have to do reform. A slow down growth is a good thing for emerging market because that's positioning yourself for the future to take off. At the end of the day, in per capita levels, in emerging market, per capita GDP ratio still only 24 to 25% use as per capita GDP level. So the gap is huge. The catch up is huge. The growth potential is huge. Absolutely on Carlos's side. How do you see it, Carlos, for 2014? Do you need to quantify any risks for Renault-Nissan in the emerging markets? No, frankly, I think the biggest risk for us is too much fluctuation on exchange rates because obviously when exchange rates fluctuate you have to adjust your own balance of operations. Let's take the example of Turkey. Well, in Turkey, we're producer in Turkey and we are, so we produce cars in Turkey, we import cars to Turkey and we export cars from Turkey. So if our balance is that imports and export are about the same amount, in a certain way we don't care about the fluctuation about the pound. If we are net importer or net exporter, well, obviously the strong volatility is gonna have an impact on us. So there are some countries where we are still unbalanced. So the biggest risk for us coming from emerging markets is the fact that we still did not find a balance and in this case, fluctuation on exchange rates can hit us in term of profits, that's it. But in fact, this is a temporary situation because you never wanna be in a situation where you depend on the fluctuation of a currency. That's why we're always looking for an opportunity to have a balance between imports and export and have as much as possible local production. Let's focus your question to Turkey or let me focus my question on Turkey. What's your greatest internal risk for 2014 which you suggest, Deputy Prime Minister? Well, first of all, maybe just few sentences about the overall developing markets and then Turkey. Now, since Federal Reserve announced its tapering process there was some talk about the developing countries going through somewhat like the Asian crisis that we lived through in 1990s. But compared to the 1990s, developing countries right now has much stronger banking systems, on average lower public debt, and again on average much higher reserves and also a better and more sophisticated macroeconomic management overall. So the next 10 years probably we are going to see lower growth rates with the developing countries compared to the past 10 years. But still on average, the developing countries will be growing much faster than the developed countries. And for Turkey, last four years, despite we are highly linked with the Eurozone, with European Union in terms of trade and investments, still we had quite high growth rates. And last four years, the total employment in Turkey increased by 6 million. That is more than the number of jobs lost in the EU total. And it seems that this job creation will continue for years to come. In terms of Turkey specific 2014, of course we have two elections, so it is okay to expect some political noise. But since we have already timely protected the balance sheet of the government against interest rates and also exchange rate risks, so public net debt in Turkey, when you look at the composition, it is only lira, the net public debt. We don't have any effects debt as the government. Our banks balance sheets are very well hedged against currency movements and interest rate movements. Also, all the consumer loans in Turkey are all in Turkish lira. We don't allow household loans to the banks in any other currency, but only in lira. So the balance sheet of the government, the banks, and the households are quite well protected against market volatility. Our corporates have some external debts, but as we experienced in 2006 and also 2009, our corporates also learned a lot about how to manage the effects risk also. So overall for 2014, we expect a growth rate of around 4% or so, and we expect our current accounts deficit to go down. Our budget deficit last year was only 1.1% of GDP. Our EU defined public debt stock is only 35% of GDP. So strong public finances, strong banking system, current accounts deficit, yes, but also taking short-term measures and more structural reforms, how to deal with that for the longer term. How do we explain the pressure under your currency right now? Right now, in Turkey, who is mostly on the buying side for dollars or euros, actually Turkish corporates, not consumers, not foreign investors, but Turkish corporates. Those Turkish corporates who have either foreign debt or who are importing companies, because of especially the local political events, they think that it is better for them to buy dollars or euros right now rather than waiting. So on the buying side, mostly we have observed Turkish corporates and not really other buyers. So the pressure on the price is mostly coming from that side and nowhere else. Okay, Finance Minister, I haven't talked to you for a little bit of time here, but I'd love to have you weigh in on the debate of the greatest risk for 2014 as you see the emerging markets. So as you explore these different countries to have France, Inc. go into, what would you classify as the greatest risk? Well, I wouldn't say anything geographical, but obviously the threats come from the Fed tappering and also from national weaknesses here or there which are not the same everywhere. Meaning that, as I said, you need to have structural reforms and you need to develop communication, you need to develop infrastructures, especially of transport, and you've got also to strengthen the macro prudential framework. I think this is absolutely necessary and this is also linked to what I said about the tappering. And also the fact that if there is a slowdown in growth and if there is still a middle class going on, there will be a tendency to have more debt and we must be very careful about that. So we must keep the pressure on that. But I wanted to react a few minutes ago on what Mr. Kagame said. I believe that the future of our economies is also linked to regional integration. It's obvious in Africa and I think there is a potential for more growth in Africa with regional integration and there are several regions of course in Africa. And it's also the case with the Arizona and its neighbors. And obviously we need to go on having very strong relationship with Turkey. It's a long run, the long way for Turkey to join the EU. But it's still perspective that we must not forget. And even without the accession of Turkey immediately, we must still cooperate. Turkey is a country friend nearby Europe and a candidate to European Union accession. And this is probably what my president, Mr. Alon, will say when he moves to Turkey next week. We absolutely must strengthen the links between as well Turkey and the EU and France and the EU and also again Africa. Good, in Africa President Kagame, if we could mark 2013 is when the terrorists reared their ugly head in a number of different countries. Is that the biggest threat to Africa going forward that in the poorer countries that this is a fervent environment for terrorism? Yes, terrorists have been taking advantage of certain weaknesses across the continent. If you look at the situation starting with Somalia, you go to Mali, there have been signs that there is a spread of that. If you look at Northern Nigeria, the tendency is terrorists. Activities will take advantage of certain weaknesses that exist in structures of governance on the continent of Africa. And certainly this has a tendency to affect business, to affect economic growth, not only of what is happening there in the very countries and the continent, but also the perception it creates for the like investors who would want to come to Africa. So it's one thing that we are focused on and want to cooperate on as Africans as well as Africa cooperates with the rest of the world to deal with that. I want to open the floor to questions so we can get the lights on, have the microphones ready, that would be terrific. Before I do it, they overused the phrase and description of you of Dr. Doom in the past, but look into your crystal ball for the final thoughts on the panel. If we're sitting in these same chairs this time in 2015, is there any surprise that we should be watching out for, Nuryal, that implodes in the emerging markets that brings us back down again? There are risks, but the results are gonna depend on structure reform and macro policy adjustments. I think this is gonna be delicate because the fragile countries should be tightening monitoring fiscal policy as a way of dealing with budget deficit and external balance and excessive inflation above target. But in the short run, if you tighten monitoring fiscal policy, your growth is gonna slow down. The balance sheets of banks and corporates is gonna weaken and all of them are facing election. So having a slowdown of growth is not popular. On the other side, if you don't take the tough decision you have to take on tightening, the risk is that one, your currency goes into a free fall. That leads to imported inflation and inflation's already high becomes even higher. And finally, who's gonna finance your external deficits or the fiscal deficit if your interest rates are too low and you have easy monetary policy? So the trade off is that in some sense, them if you do and them if you don't, my suggestion will be take the bitter pill of doing the adjustment sooner because it will stabilize your economy and next year is gonna be better here. But if you don't take the bitter pill of doing structure reform, monitoring fiscal tightening and regaining credibility, next year could be actually worse than this year. So it's gonna all depend on the policy actions. Great, let's take some questions from the floor. Because of time, we have about 10 minutes, we can direct it to a person on the panel, please there and then we'll have the microphone to the gentleman and also here. We have a second microphone would be terrific there. Yeah, thanks, please. Peter Vanhamen, emerging markets journalist. One of the most interesting comments I heard was brought forward by Robini, Professor Robini, sorry, who talked about the middle income trap then afterwards paradoxically the middle income, sorry, the middle class is getting restless. This is a paradox indeed. And could you explain that paradox and can we expect more of that going forward? Is this the threat that we see in emerging markets? So it's a restless middle class is what you're suggesting? Well, certainly that's one of the aspects of democracy. You have democracy, you have middle classes that are engaged in the political process. There is now social media that allows, like in Brazil recently, flash mobs or other people getting organized. Even the Arab Spring Revolver due to the internet. There is an element of it that I think it's positive, an element of it of political instability, but it implies that government have to be more reactive to the needs of both the poor and the middle classes in terms of sound economic policies, providing economic opportunities, providing public services and the quality of it, fighting corruption and so on. So I would say on the net is a positive if the policy response in the right direction. If it's not then it's gonna lead to more political and policy and stability electoral and maybe damaging, but on net I think is a positive. I had a question here. Evening. My name is Bonola Ramukhele, a global shaper from the Johannesburg hub in South Africa. My question is directed to the honorable President, Paul Kagan. Taking cognizant of the fact that each and every country in Africa is different and there are security issues, but when will we have a situation whereby we've got a visa less Africa and we can be able to move from one country to the next and be able to trade? Because one of the issues is that trade amongst Africa is quite low because the infrastructure and being able to move from one country to the next is near impossible. And being able to import or export from one country to the next, some of the inhibitors are quite artificial. Paper work at borders and so forth is just too cumbersome to actually get things done. Thank you. Thank you. I was much worse 10 years ago, disaster 20 years ago, but do we need to accelerate the lowering of trade barriers and the free movement of people in Africa? That's the heart of the question. Yes. One of the things we are doing and concentrating on when I talked about customs union we have created in the East African region and common market protocol that has been put in place is about facilitation of movement of people, of goods and services. And as we do that, we cooperate on other issues. We are not just allowing business to freely move across borders. We're also continuing with kinds of political efforts and in that regard that should allow there for this. Of course, there are botanics. We have to keep working at that every time. It doesn't mean that we are at the same level as we want to cooperate across the continent whether it is in the East African community or other parts of the continent. Some people want to and are able to do it faster. Some of the requirements are put in place faster than others are able to do it. So there is a lot of effort going on but some realism also and the patients have got to step in. Min, just to get your thoughts on Africa here to conclude, it's extraordinary because we kept on saying that Africa was living below its potential for years and years and years. And then about five years ago, the light switch seemed to have gone on and it's shining brightly right now. What was the turning point for Africa that nobody really seems to focus on today? I think there are a few things. The growth has been very strong. Loss is 5%. This year we see 6%. So it is very good. I think a few things change and the governance is really getting better and the macro stability has improved because the macro policy in the field is much better now today. And the capital flow helps on infrastructure investments and all other things driving domestic demand from consumers inside and investments are also lifted up. So whole Africa region, particularly South Sahara Africa region really pick it up. I think this is a very good news, fantastic news since we have observed and we are very positive for the region to continue the growth in next year. Great. Gentlemen, thanks very much for the attention and the round table. I appreciate it. A nice round of applause please if we can. And thanks for the questions from the floor. Thanks very much.