Moody’s has revised its global growth projections on the back of supply shocks, inflation triggered by the Russia-Ukraine conflict and the recent pandemic lockdowns in China.

The ratings agency revised its projections for advanced economies to 2.6 percent from 3.2 percent, and to 3.8 percent from 4.2 percent for emerging economies.

In a research announcement, the service said further risks include an escalation of the conflict between Russia and Ukraine and a faster than expected slowdown in China’s growth.

High food and energy prices could carry on for several more months due to elevated food and energy prices, the agency said.

Madhavi Bokil, senior vice president/CSR at Moody’s, said the except for in Russia, the agency currently did not expect a recession in any G20 country in 2022 or 2023.

“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.”

 According to the ratings agency, the next few months will be critical. Growth path could become more sustainable through next year if the global economy can remain resilient.

“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,” it said.  

“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,” Moody’s noted.

(Writing by Imogen Lillywhite; editing by Seban Scaria)