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Trump's Economic Policies Spark Global Market Gains but Raise Concerns for African Economies

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Trump's Economic Policies Spark Global Market Gains but Raise Concerns for African Economies
President Donald Trump has set the global economic order moving on his wheels

Shadrack Kolya, a markets expert, warned of serious consequences for Africa, saying the region could face a liquidity crunch as access to capital markets tightens, increasing borrowing costs and reducing investment.

Global investors are turning their attention to the United States, lured by the potential for higher returns in money and securities markets.

Experts warn that this shift could have negative consequences for African economies, including Uganda, as the dollar strengthens and debt costs rise.

On Tuesday, global stock markets rallied after US President Donald Trump refrained from announcing new tariffs on his first day in office.

The S&P 500, Nasdaq, and Dow Jones all posted gains, with similar modest increases in Europe and Asia.

Ivan Busuulwa, an investment analyst, said this development is likely to result in significant capital outflows from African markets.

“Rates in the US are increasing, and any rational investor would now divest from local and regional markets to invest in US securities,” Busuulwa explained.

Although Trump avoided immediate tariffs, he has ordered a review of US trade deals and threatened Canada and Mexico with a 25% tariff beginning in February.

According to Busuulwa, Uganda could also be affected, particularly as the country recently joined the BRICS bloc, which Trump has threatened with a 50% tax.

Shadrack Kolya, a markets expert, warned of serious consequences for Africa. He said the region could face a liquidity crunch as access to capital markets tightens, increasing borrowing costs and reducing investment.

A stronger US dollar could also drive inflation, escalate debt servicing costs, erode purchasing power, and exert pressure on already indebted governments.

Additionally, Trump’s protectionist policies may trigger trade wars that disrupt global supply chains, further harming African economies.

According to the Standard Chartered Global Market Outlook 2025, the Bank of Uganda and the Ministry of Finance will play a critical role in stabilising Uganda’s financial markets amid these global uncertainties.

State Minister for Finance Henry Musaasizi acknowledged the challenges but remained noncommittal on specific measures.

“I can’t give a definite answer right now without consulting the Bank of Uganda Governor, but the Ministry of Finance will do the needful to ensure market stability,” he said.

While some African countries may benefit from filling gaps in global supply chains created by US-China trade tensions, analysts and the International Monetary Fund have raised concerns about the broader impact of Trump’s policies.

They warn that disruptions to global trade could ultimately backfire on the United States itself.

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