[OPINION] Trade wars effects on emerging economies

The ongoing US-China trade war has far reaching global ramifications; many emerging economies now are starting to feel the pinch as these two superpowers lock heads. This has now created a lot of uncertainty in the global community.  The uncertainty has led to less risk taking in investment in emerging markets.

The 2018 global growth was predicted to be 3.7% now new forecast put it at 3.5%, these may be effects of the trade war. The lack of global growth may have detrimental effects on emerging economies such as South Africa which is facing a technical recession.

The trade war has also affected other emerging economy countries, Brazil has been impacted through global commodity prices.

It does not profit Brazil, when it substitutes US soybeans imported by China. Brazil also stands to lose in other markets such as the exporting of iron ores, grains and meats being affect in the long term as the trade war progress.

Other countries such as India are ripping benefits of the trade war. Tensions between US-China are leading to a decrease in Chinese import of US oil, which allows India to replace China and obtain lower price due to the lower demand for US oil.

China is suffering from losses of the trade war but neither US or China have any advantage as both countries are losing. China and the US are set to lose more as the tensions deepen. The US has already stated that more tariffs are coming for China while china is planning its retaliation.

Russia unlike China has a deeper conflict with the US as they are suffering from US and EU sanctions. The sanctions have a more direct impact on their economy and lowering the value of their currency.

By Mokgethi Mtezuka’

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