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Moody's has cut its growth projections for G20 economies, as the war in Ukraine, tightening financial conditions and COVID-19 restrictions in China drag on.
The G20 economies, which grew 5.9% last year, are now forecast to collectively grow 2.5% in 2022, before slowing again to 2.1% in 2023. The new projections mark a decline of 0.6 and 0.8 percentage points, respectively, from Moody's forecasts in May.
"Our revised projections reflect the significant deterioration in economic outlooks since the start of the year, resulting from the protracted Russia-Ukraine military conflict, a severe tightening of global financial conditions... and the hit to global production and shipping from China's strict COVID-19 lockdown policies," the ratings agency said.
For the G20 advanced economies, Moody's project a 2.1% real GDP growth in 2022, and 1.1% in 2023. Countries in the G20 emerging markets are expected to grow 3.3% in 2022 and 3.8% in 2023, following a 7.3% expansion in 2021.
Moody's said several factors will determine the strength of economic activity through the remainder of 2022 and into 2023 and these include interest rate hikes, commodity prices and China's economic recovery.
"Record high inflation, asset price corrections, financial market volatility and economic uncertainty have already unsettled households and firms, as reflected in downbeat consumer sentiment and investment intensions in most major economies," Moody's said.
"Financial conditions have also tightened considerably over just a few months after growing alarm about persistent and broad-based inflation triggered sharp reactions from central banks globally."
(Writing by Cleofe Maceda; editing by Seban Scaria)
