The Strategist

Moody's worsens global GDP growth forecast for 2022

05/27/2022 - 10:22

Moody's has dropped its projection for world GDP growth in 2022 to 3.1 percent from 3.6 percent in March.
"Due to a variety of negative variables, we have decreased our global growth predictions and upped our inflation forecasts for 2022 and 2023. Continued supply-side shocks (which are heating up prices and eroding purchasing power) and a worldwide shift toward tighter monetary policy are the primary factors restraining economic growth," according to the research.

Moody's also lowered GDP growth expectations for the United States (to 2.8 percent from 3.7 percent), the eurozone (to 2.5 percent from 2.8 percent), and China (to 2.5 percent from 2.8 percent) (to 4.5 percent from 5.2 percent ). Forecasts for 2023 were kept the same. As a result, the agency forecasts worldwide GDP growth of 2.9 percent, 2.3 percent in the US and the eurozone, and 5.3 percent in China.

"By the end of this year, we expect global monetary conditions to be quite tight, with inflation rates inevitably decreasing in 2023... The outcome of the Russia-Ukraine war, particularly acts affecting the supply and demand balance for essential items, as well as the speed with which Chinese authorities restore production and supply after COVID-19, will be crucial," according to the agency.