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THE recent United States tariff increases are expected to have only a limited effect on global economic growth outside the Asia-Pacific region, according to S&P Global Ratings.
In a note released today, S&P said that despite initial concerns over the implications for global trade, most emerging markets (EMs) are likely to experience minimal disruption, with the exception of countries geographically closer to the US, such as Mexico.
“The effects of tariffs on GDP growth are relatively low outside APAC,” it said. “This is because most countries run a trade deficit with the US, and the April 2 tariffs were therefore 10 per cent.”
S&P Global also noted that for most EMs, the primary economic impact stemmed from direct trade disruptions rather than indirect effects such as subdued global demand or increased uncertainty.
The agency now expects EM central banks to cut interest rates more aggressively than previously forecast in March. It pointed to Latin America in particular, where policy rates remain above neutral, as a region likely to see sharper easing.
“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. - May 2, 2025