Series of tariffs announced by U.S. govt may have negative effects on global economy – Bank of Ghana

The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has noted that the global environment has become more challenging, reflecting trade and economic policy uncertainty.

President Donald Trump on Wednesday, March 26 announced 25% tariffs on all cars shipped to the United States, a significant escalation in a global trade war.

The tariffs, set to take effect on April 3 at 12:01 am ET, are aimed at expanding America’s auto manufacturing prowess. For decades, because of a free trade agreement, automakers have treated Canada, Mexico and the United States as one big country, with no tariffs among them. Although the United States is home to a significant automaking industry, Trump wants to grow it.

“Frankly, friend has been oftentimes much worse than foe. And what we’re going to be doing is a 25% tariff on all cars that are not made in the United States,” Trump told reporters on Wednesday before signing an executive proclamation in the Oval Office. “If they’re made in the United States, it’s absolutely no tariff.”

Speaking during the 123rd MPC press conference in Accra on Friday, March 28, Governor of the BoG Dr Johnson Asiama said that  “The series of tariffs announced by the U.S. administration is evolving and may have negative effects on the global economy.”

He further stated that these developments have already triggered downgrades in Gross Domestic Product (GDP) growth forecasts in the two largest economies—U.S. and China—and in turn, global growth. In addition, the disinflation process appears to have stalled in some countries, while financial conditions remain broadly restrictive as central banks slow the pace of monetary policy easing.

“The persistence of these external headwinds may spill over to the domestic economy through the trade and financial channels, highlighting the need for policy to remain proactive,” he said.

On the domestic scene, Dr Johnson Asiama said that prices of Ghana’s major export commodities traded mixed on the international commodities market in early 2025.

He said “Gold prices crossed the US$3,000 per fine ounce on March 14, 2025, on account of heightened economic uncertainty triggered by the trade and geopolitical tensions, persistent inflation, and weakening US dollar.”

In February 2025, he said, gold prices averaged US$2,897.3 per fine ounce, indicating a year-on-year growth of 9.7 percent. Similarly, crude oil prices recorded a marginal annual growth of 2.4 percent to settle at an average price of US$74.95 per barrel.

Cocoa prices, however, declined by 8.5 percent driven by improving supply outlook for the current 2024/25 season, Dr Asiama stated.

In the banking sector, Dr Asiama said that banks’ performance continued to improve.

Total bank assets recorded 34.0 percent growth at the end of February 2025 relative to 12.1 percent growth, in the same period last year, he said.

With regulatory reliefs, the banking industry’s Capital Adequacy Ratio (CAR) was higher at 14.4 percent compared to 13.6 percent in the same period last year, Dr Asiama added.

Read Also: Global inflation is expected to remain high in the near-term – BoG Boss

“Without reliefs, CAR was 12.1 percent. The industry’s Non-Performing Loan (NPL) ratio declined to 22.6 percent in February 2025 from 24.6 percent in February 2024. Excluding the loans in the loss category, which are fully provisioned, the NPL ratio as at end-February 2025 was 8.9 percent,” he said.

Dr Asiama further stated that overall, the Financial Soundness Indicators showed broad improvements in asset growth, solvency, liquidity, efficiency, and profitability.

.The fiscal policy stance was more expansionary than expected in 2024. The 2024 fiscal deficit, on commitment basis, was 7.9 percent of GDP against a target of 3.8 percent of GDP, on the back of higher expenditures than target.

“This notwithstanding, early indications from banking sector data suggest some improvements in fiscal performance in early 2025.

“This, along with the commitment to fiscal consolidation presented in the 2025 budget, should support the fiscal outlook. Also, the ratio of public debt declined supported by the debt restructuring,” he said.

Dr Asiama also said that private sector credit is beginning to show signs of recovery.

In February 2025, he said, private sector credit recorded 26.9 percent annual growth, compared with 5.1 percent in February 2024. In real terms, he added, credit growth was 3.1 percent, compared with a decline of 14.7 percent in February 2024.

 

 

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