Reserve Bank Governor sends a message to the world

The renewed trade tensions between the US and China could push prices lower in other countries at the expense of their own manufacturers, South Africa’s central bank governor Lesetja Kganyago said.

When a country faces restrictive tariffs, it seeks out buyers elsewhere, Kganyago said in an interview in Washington Thursday.

“The interesting thing about that spillover is that it could actually depress prices elsewhere and initially it might be beneficial,” Kganyago said. “And it might actually end up looking like dumping or something along those lines.”

Kganyago’s comments highlight the growing risks of the US-China trade tensions for the world economy, and followed a Group of 20 Finance Ministers and Central Bank Governors meeting in which they called for the International Monetary Fund to analyze “all excessive imbalances.”

The G-20 finance chiefs also affirmed their support of the World Trade Organization to regulate global trade, though they recognized that the framework needs to reformed to deal with “today’s realities.”