Global economy to grow 2.7% in 2022 and will slow down further in 2023: Moody’s

It noted that business sentiment remains muted and is consistent with a global economy that is just avoiding recession. According to the research firm, the global environment is more fragile as record-high inflation continues to gain momentum and growth decelerates. It added that stagflation risks have risen worldwide, but a stagflationary environment would take months to be realised.

The report follows the United States and half a dozen other countries’ rate hikes last week. Back home, the Reserve Bank of India (RBI) will deliver its monetary policy decision later this week.

Global consumer price inflation gained momentum in August, driven by soaring price gains in most major countries.

According to Moody’s report, price growth accelerated to 11.9 percent year-over-year, its 12th consecutive increase and the highest rate since January 1981. The inflationary environment continues to be driven by two strong waves of negative supply shocks, it said.

“Even as the global economy continued to work through the cost increases stemming from the widespread factory and retail lockdowns at the outset of the COVID-19 pandemic, the Russian invasion of Ukraine exacerbated the existing cost-push inflation and growth risks. Inflation that started to rise in March 2021 above the 2 percent target set by central banks accelerated sharply worldwide following February’s invasion, especially for food and energy categories,” the report pointed out.