Selangor Journal
A shopper wearing a protective mask pushes a shopping cart at Japan’s supermarket group Aeon’s shopping mall as the mall reopens amid the Covid-19 outbreak in Chiba, Japan, on May 28, 2020. — Picture by REUTERS

Moody’s Analytics expects global GDP growth at 2.8 pct in 2022, 3.1 pct in 2023

KUALA LUMPUR, June 20 — Moody’s Analytics expects global real gross domestic demand (GDP) growth to decelerate in 2022, as policy support fades, pent-up demand cools, supply-side inflation remains elevated, and interest rate tightening gains pace.

The financial intelligence and analytical tools provider said global GDP growth is forecast at 2.8 per cent in 2022 and 3.1 per cent in 2023, after peaking at 5.6 per cent in 2021.

“Asia and the United States are expected to support global growth with GDP up 4.1 per cent and 2.7 per cent, respectively, in 2022.

“China and India will remain in expansion, though growth will moderate to 4.5 per cent and 7.4 per cent, respectively, in 2022 before picking up in 2023,” it said in its “Global Outlook: The Big Challenge” commentary today.

It added that the Euro zone GDP growth is forecast at 2.7 per cent in 2022 and 2.1 per cent in 2023, while Japan’s growth is 1.6 per cent in 2022 and 2.4 per cent in 2023.

Moody’s said the volatility in global commodity markets and an increasingly risk-averse trading environment are likely to sustain inflation well above comfort levels throughout this year.

It expects to see central banks continuing to withdraw extraordinary pandemic-driven stimulus and tighten rates aggressively in the months ahead.

“This poses multiple risks. With most current inflation being imported or supply-driven, the effectiveness of monetary policy as an instrument to tame price pressures will be limited.

“Not only will consumers contend with weaker real purchasing power but higher borrowing costs and tighter financing conditions can weigh heavily on leveraged households, hurt business confidence, and delay investment decisions,” it said.

Overall, the painful but necessary policy response to current inflation would not just see central banks possibly overshoot their neutral rates in the short term, slowing growth, it could also elevate recession risks for some countries and widen income and welfare disparities in the second half of 2022, said Moody’s.

— Bernama

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