US Tariff Hikes Have Limited Global GDP Impact Outside APAC, Says S&P Global Ratings

KUALA LUMPUR, May 2 (Bernama) -- Global economic growth remains resilient despite the recent United States (US) tariff hike, with limited gross domestic product (GDP) impact outside the Asia-Pacific (APAC) region, S&P Global Ratings said.

While the April 2 tariff hike has raised concerns over global trade flows, most emerging markets (EMs) are expected to weather the changes with minimal disruption -- except for countries near the US, such as Mexico, it said.

“The effects of tariffs on GDP growth are relatively low outside APAC.

“This is because most countries run a trade deficit with the US, and the April 2 tariffs were therefore 10 per cent,” it said in a note today.

S&P Global also said that in most EMs, the direct impacts of the tariffs -- such as reduced trade flows -- had a greater effect on economic activity than indirect consequences, such as weaker global demand and heightened uncertainty.

S&P Global forecasts that EM central banks will cut policy rates more aggressively than projected in its March forecast.

It said central banks in Latin America are likely to ease more sharply, given their current policy rates remain above neutral, it said.

“The recent appreciation of EM currencies against the US dollar leaves central banks with more room to cut rates across the countries we cover.

“The combination of stronger EM currencies and lower oil prices will help reduce inflation in most EMs, as these economies are generally net importers of energy,” it added.

-- BERNAMA