DECLINING fiscal support, tighter monetary policy and waning pent-up demand will weigh on growth momentum in most countries, according to Moody’s Investors Service.
“Although we expect the rapid rise in inflation in recent months to subside, the steep and broad-based increase in prices is eroding household purchasing power and could weaken the recovery,” the credit rating agency said in the latest update to its Global Macro Outlook for 2022-2023 report.
It noted that the global economy is transitioning from a tentative recovery toward more stable growth, bolstered by improvement in the COVID-19 health situation.
Moody’s said the current economic cycle is remarkable in the swiftness with which activity has been restored in most major economies.
“We expect the Group of 20 (G20) economies collectively to expand 4.3% in 2022, down from 5.9% in 2021 yet still above long-term trend growth.
“Global growth will further slow to 3.2% in 2023 as pandemic-fueled output losses have been largely recouped and labour markets in advanced economies approach a full recovery,” it said.
The agency also predicted a challenging first half of 2022, with elevated commodity prices, demand-supply imbalances, inflation pressures, volatile financial markets and geopolitical tensions.
“However, we expect demand-supply distortions to resolve over 2022, with supply bottlenecks easing in the second half of the year,” it added. – Feb 24, 2022
