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BUSINESS

Moody's lowers global growth forecasts for 2022, 2023 due to supply shocks, inflation

26/05/2022 05:59 PM

KUALA LUMPUR, May 26 (Bernama) -- Moody’s Investors Services has lowered its global growth projections for 2022 and next year as Russia's invasion of Ukraine and pandemic lockdowns in China add to supply shocks and stoke inflation.

In a statement today, Moody's said advanced economies are set to expand 2.6 per cent in 2022 and those in emerging markets to grow 3.8 per cent, down from its previous forecasts of 3.2 per cent and 4.2 per cent, respectively.

The credit rating agency said high inflation rates could persist for several more months, owing to elevated energy and food prices.

Senior vice president/CSR Madhavi Bokil said Moody's does not expect a recession in any Group of 20 (G-20) country in 2022 or 2023, except for Russia.

"Still, there are multiple risks that could further undermine the economic outlook, including additional upward pressure on commodity prices, longer-lasting supply-chain disruptions, or a larger-than-expected slowdown in China.

"Aggressive monetary tightening, amid worries of long-term inflation expectations getting unanchored, could also become a catalyst for a recession," she said.

Moody's said the growth path could become more sustainable through next year if the global economy can remain resilient over the next few months.

"Economies are returning to a post-pandemic normal, which involves reversals of some economic patterns to pre-COVID trends and permanent changes to others.

"As pandemic disruption wanes, households are once again spending more of their incomes on high-contact service activities and buying fewer goods," it added.

Moody's noted that as central banks shift to tighten monetary policy in response to higher inflation, there has been a rise in financial market volatility and asset repricing.

"Bond yields the world over have risen in anticipation of further interest rate hikes, equity prices have fallen from their peaks, and the US dollar has strengthened," it said.

-- BERNAMA

 

 


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