(MENAFN- Trend News Agency)
The drop in U.S. economic productivity for two consecutive
quarters has fueled fears that the superpower will enter a
recession, while African countries may face more significant
economic challenges due to reduced exports and higher financing
costs, Trend reports citing Xinhua .
The looming recession in the United States means that market
demand is shrinking. The exports of developing countries, including
African countries, to the U.S. market are expected to be affected,
Charles Onunaiju, director of the Abuja-based Center for China
Studies in Nigeria, told Xinhua in a recent interview.
Meanwhile, the tightening of monetary policy by the U.S. Federal
Reserve to curb high inflation will inevitably affect international
capital flows, raising the cost of financing African countries need
to maintain economic activities, thus affecting their recovery from
the COVID-19 pandemic, said Onunaiju.
He noted that the long-term U.S. dollar hegemony has made
African economies tie their key economic fundamentals and foreign
trade to the currency, which means the United States could transfer
inflationary pressure to other countries through its domestic
monetary policy.
'One of the challenges that economies in Nigeria and Africa (at
large) are facing is inflationary pressure ... They are all
imported inflationary pressure arising from the hegemony of the
dollar as a major currency of exchange,' Onunaiju said.
According to the expert, multiple factors are responsible for
the economic impasse in the United States, including its domestic
structural problems as well as Washington's geopolitical mentality
and saber-rattling actions.
'So, I think what is very clear is a combination of
politically-motivated economic policies that are not right on
point, and structural issues mostly account for the current state
of the U.S. economy, which seemed to be on the downturn, and nobody
can tell the direction,' he noted.
These factors have disrupted the global industrial and supply
chains, harmed energy and food security and had a counter effect on
the American economy itself, thus affecting the recovery pace of
the global economy, the expert added.
He called on the U.S. government to undertake its responsibility
as a global power when facing downward economic pressure instead of
shifting that pressure elsewhere.
What's more, the country needs to look inwards to enact the
necessary reforms that could help address its domestic structural
issues rather than promoting geopolitics which could further cause
a slowdown, he added.
The expert noted that some countries have recently begun to
reduce their holdings of U.S. debt, a move to control the risks in
foreign exchange reserves.
Onunaiju also called on countries, especially developing
countries, to establish a more robust financial mechanism as a new
channel for financial transactions to offset the negative impact of
U.S. dollar hegemony.
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