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US-China trade tensions could hit African growth

Updated February 09, 2019

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“AfDB in particular expects a noticeable impact in the tradable sectors." — File
“AfDB in particular expects a noticeable impact in the tradable sectors." — File

ADDIS ABABA: Persisting trade tensions between economic superpowers the United States and China could shave 0.7 per cent from Africa’s GDP in 2019, a senior official at the African Development Bank (AfDB) said on Friday.

Hanan Morsy, director of the AfDB’s macroeconomic policy department, made the prediction on the sidelines of an African Union meeting in Addis Ababa as fresh doubts emerged over the prospects for US-China trade war negotiations.

She was speaking after the release of the bank’s African Economic Outlook 2019 report, which said the continent registered growth of 3.5pc in 2018, and was expected to grow 4pc in 2019. This is higher than most regions of the world but still insufficient to address persistent fiscal and current account deficits and “unsustainable debt”.

Furthermore, the ongoing trade battle between the US and China could “have a negative impact of 0.7pc of GDP from Africa. This impact will be through lack of trade and investment flows”.

“AfDB in particular expects a noticeable impact in the tradable sectors, including export commodities like minerals, oil and food related products,” she added.

The United States has threatened to more than double existing tariffs on Chinese goods at the start of March if there is no agreement on measures to reform China’s trade practices, which Washington says are deeply unfair.

US President Donald Trump said Thursday he did not expect to meet his Chinese counterpart Xi Jinping before the March 1 deadline, leading to a slump in world stock markets.

Top White House economist Larry Kudlow told Fox Business on Thursday that while Trump was “optimistic” about prospects for a deal, there remained a “sizeable distance” separating the two sides.

Published in Dawn, February 9th, 2019