Interview: Policy mistakes sap U.S. economy, dampen world economic outlook -- Egyptian expert

CAIRO, Aug. 4 (Xinhua) -- Grave mistakes in Washington's economic policies have sapped the U.S. economy, thereby clouding the world economic outlook, an Egyptian expert has said.

Given the magnitude of the U.S. economy, its crises and problems are negatively reflected on the global economy at present, Karim Al-Omda, a Cairo-based economic expert and professor with the Arab Academy for Science, Technology and Maritime Transport, told Xinhua.

Last week, the Federal Reserve imposed another 75-basis-point rate hike, the largest back-to-back rate increase in decades, in a bid to tamp down rampant inflation, which remains a four-decade high.

The expert believed that the situations of the United States, one of the largest economies in the world, will have repercussions not only on Egypt and the wider Middle East, but also on the global economy as a whole.

The challenges include increasing debt risks, persistently high inflation and disruption of the supply chain, among many others, Al-Omda added.

The U.S. economy contracted for the second straight quarter, with growth falling at a 0.9 percent annual rate in the April-June period.

The stagnation results from Washington's major mistakes in economic policies, most notably those provoking trade wars with more than one party, as well as those raising interest rates to record highs, Al-Omda said.

For instance, the economic sanctions imposed by the United States on Russia, Iran, and other countries, undoubtedly affect the U.S. economy as well and consequently impede global economic growth, the expert added.

Meanwhile, the steady rise in oil prices globally, the enduring negative economic effects of the COVID-19 pandemic as well as the Ukraine crisis and its shockwaves across Europe and beyond, have also weighed heavily on the U.S. economy, Al-Omda noted.

"I believe that the global economies are affected by the repeated crises that the U.S. economy is exposed to, and this may prompt many economies in the world to try to disengage from the American economy and the U.S. currency," Al-Omda said.

"This has been noted through the desire of many countries to complete trade exchange operations either in local currencies or other global currencies," the expert added.