As the world stares at recession concerns, the global economy shall grow at 2.7 percent in 2022 and the growth is expected to slow down to 2.3 percent in 2023, the latest Moody’s report said on Monday.
Moody’s has reduced the global real GDP forecast to 2.7 percent in 2022 (September baseline) from 4.2 percent in its January forecast. For 2023, the GDP projection has been revised lower to 2.3 percent from 3.6 percent.
“While we project that the global economy will grow in 2022, any policy missteps or additional risks would increase the threat of a global recession in the next 12 months above our current assessment of just over even odds,” financial services firm Moody’s Analytics said in its report titled “Global Outlook: Global Economy on Edge”.
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.
(Edited by : Kanishka Sarkar)
