Moody’s lowers predictions on economic growth, as inflation rises
Moody’s has reduced its international economic growth predictions while raising its inflation expectations due to rising commodity costs.
The global rating agency now expects the G20 economies to expand 3.6 percent collectively in 2022, down from its previous forecast of 4.3 percent in its February outlook.
Growth is expected to further slow to 3 percent in 2023, the agency said in its Global Macro Outlook 2022-23 March Update report.
Russia is the only G20 economy expected to decrease by 7 percent this year and 3 percent in 2023, compared to prior growth predictions of 2 percent and 1.5 percent, correspondingly, prior to its invasion of Ukrainian territories.
The firm cautioned throughout a statement in which its mentioned that, “in an alternative downside scenario to our baseline forecasts, in which oil and gas exports from Russia to Europe are cut, oil prices would surge and the global economy would be thrust into recession.”
Moody’s also said inflation expectations for the G20 advanced economies are raised, as it is forecast to be 1.8 percentage points higher on average at the end of 2022, compared to the previous estimate.
In the G20 emerging market countries, inflation is anticipated to increase 3.5 percent on average above the expectations made in February.
“In Brazil, Mexico, the euro area, Turkey, South Africa and India, energy prices make up more than 8 percent-14 percent of the consumer price index basket. In most other G20 economies, energy is around 6 percent-8 percent of the consumer’s consumption basket,” read the report.
The Turkish economy will expand 3.5 percent his year, Mood’s said - down by 0.5 percentage points from its previous estimate.
Its year-end inflation forecast for Turkey was raised by 3.5 percentage points to 35 percet.