Policy response to be strong, targeted in COVID-19 affected countries - Moody’s

KUALA LUMPUR, March 7 -- Policy response is likely to be strong and targeted from fiscal authorities, central banks and international institutions in COVID-19 affected countries, said Moody's Investors Service (Moody’s). 

“Targeted fiscal policy measures will likely help limit the damage in individual economies,” it said in a statement today. 

Moody's also expects central banks to adopt an easier stance, reinforcing fiscal measures.

“The US Federal Reserve's decision to cut the federal funds rate by 50 basis points and the announcements from the European Central Bank and the Bank of Japan assuring policy support will partially limit global financial market volatility and partly counter the tightening of financial conditions,” it said.

Meanwhile, the credit rating agency has revised its Global Macro Outlook and its baseline growth forecasts for all G20 economies.

The coronavirus outbreak has spread rapidly outside China to a number of major economies, it said.

“It now seems certain that even if the virus is steadily contained, the outbreak will dampen global economic activity well into the second quarter of this year,” said Moody’s.

It has revised the baseline growth forecasts for G20 economies to 2.1 per cent, 0.3 percentage point lower than the previous baseline.

China's 2020 growth forecast has also been reduced to 4.8 per cent from the previous estimate of 5.2 per cent.

For the US, growth of 1.5 per cent is now expected, down from the previous estimate of 1.7 per cent.

-- BERNAMA