Moody’s Investors Service lowered its economic growth forecast for the world’s 20 argent economies. It comes as the ongoing Russian war in Ukraine continues to influence the larger global macroeconomic picture amid mounting inflation, as well as skyrocketing energy costs.
Moody’s expects the real gross domestic product of the Group of 20 economies, known popularly as the G20, to expand by 2.5 percent in 2022. This is down 6 percentage points from its 3.1 percent growth estimate in May.
Just over two percent growth is expected now for 2023 at 2.1 percent, down from the earlier 2.9 percent projection.
Meanwhile, for G20 advanced economies, Moody’s forecasts 2.1 percent growth in 2022 and 1.1 percent in 2023, while the projections for G20 emerging market countries stand at 3.3 percent and 3.8 percent, respectively.
“Global monetary and financial conditions will remain fairly restrictive through 2023,” Madhavi Bokil, a senior vice president at Moody’s, said in a report released on Thursday.
“Central banks will require decisive proof that high inflation no longer poses a threat to their policy objectives before letting up on their tight monetary stance. The challenging global economic environment of today will be resolved with a sharp and disinflationary slowdown in economic growth,” Bokil said.
The International Monetary Fund said in July that it expects advanced economies to grow 2.5 percent this year. This is lower than the earlier 3.3 percent estimate and much lower than the 5.2 percent growth that was seen last year in 2021.
Inflation is massive harm to growth potential. Inflation is being forecasted to average 8.3 percent globally this year. In advanced economies, inflation is expected to reach an aggregate of 6.6 percent. In developing and emerging economies, that number is higher. At 9.5 percent.
The latest numbers coming out of Moody’s estimates reflect how big of a spillover the Russian military offensive in Ukraine is having.
The United States is experiencing a four-decade high in inflation. And in the UK and other major European economies, that is the same.