US-China trade ‘war’ affecting global economic growth – Dr Addison

The global economic growth has remained subdued due to US-China trade tensions and the unresolved Brexit negotiations, as well as geopolitical tensions which impacted on oil prices, Dr Ernest Addison, Governor of the Bank of Ghana (BoG), has said.

He said these developments have softened business confidence and further weakened investments in advanced economies.

Dr Addison was speaking during the Monetary Policy Committee (MPC) meeting in Accra on Friday 20th September, 2019.

He said: “Since the last meeting of the MPC in July 2019,Global growth has remained subdued attributed to US-China trade tensions and the unresolved Brexit negotiations, as well as geopolitical tensions which impacted on oil prices.

“These developments have softened business confidence and further weakened investments in advanced economies.

“In emerging market and developing economies, growth has also weakened partly influenced by the slowdown in global trade and concerns on the US-China trade tensions.”

He added that: “Consistent with global growth, global inflation in advanced economies has softened due to sluggish wage growth, and to some extent, lower energy price. Although, inflation is forecast to remain stable in advanced economies, the upsurge in recent geopolitical tensions and loss of oil infrastructure in Saudi Arabia, may temporarily pose some risks to crude oil supplies and exert upward pressure on prices.

“Global financing conditions remain favourable due to the general accommodative monetary policy stance across most advanced and emerging market economies.

“The weakened growth momentum underpinning the dovish shift in central bank forward guidance in most advanced economies may keep interest rates low to support growth over the medium-term.

“Just two days ago, the US Federal Reserve cut interest rates, the second time since July. The European Central Bank has also lowered interest rates and restarted its asset purchase programme, all in a bid to prop up economic activity. Central banks in most emerging market and developing economies have also followed the same policy direction.

“These developments may further trigger search for higher yields, especially in emerging market economies with stronger fundamentals.”