Falling US economic productivity for two consecutive quarters has fueled fears that the superpower is heading into recession, while African countries could face greater economic challenges due to reduced exports and rising production costs. financing, according to an expert.
The impending recession in the United States means that market demand is contracting. Exports from developing countries, including African countries, to the US 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 US Federal Reserve to curb high inflation will inevitably affect international capital flows, increasing the cost of financing that African countries need to maintain their economic activities, thus affecting their recovery. after the COVID-19 pandemic, Mr. Onunaiju said.
He noted that the long-term hegemony of the US dollar has caused African economies to link their key economic fundamentals and foreign trade to the currency, which means that the US could transfer inflationary pressure to other countries. through their domestic monetary policy.
“One of the challenges facing the economies of Nigeria and Africa (as a whole) is facing inflationary pressure… These are all imported inflationary pressures resulting from the hegemony of the dollar as the main currency of exchange,” Onunaiju said.
According to the expert, multiple factors are responsible for the economic impasse in the United States, including its internal structural problems as well as Washington’s geopolitical mentality and its saber actions.
“So I think what’s very clear is a combination of politically motivated economic policies that aren’t right, and structural issues are mostly explaining the current state of the US economy, which seemed to be in a downturn, and no one can tell the direction,” he noted.
These factors have disrupted global industrial and supply chains, harmed energy and food security, and adversely affected the U.S. economy itself, affecting the pace of global economic recovery, the official added. ‘expert.
He called on the US government to assume its responsibility as a world power in the face of downward economic pressure instead of shifting that pressure elsewhere.
Moreover, the country must look inward to enact necessary reforms that could help solve its internal structural problems rather than promoting geopolitics that could further cause a downturn, he added.
The expert noted that some countries have recently started to reduce their holdings of US debt, a measure aimed at controlling risks related to 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 US dollar hegemony.