Moody’s has revised the growth of the G20 economies in hand, now expecting a total GDP growth of 1.3% in 2023, against a corresponding forecast of 2.1% previously. For the current year, the forecast is 2.5%.
In fact, for the Eurozone, the American rating agency is talking about a recession of 0.6% next year after economic growth of around 3% in 2022.
Declining economic activity in advanced economies, especially in Europe and North America, will lead to a sharp slowdown in growth in 2023. In 2024, the global economy will grow by 2.2%.
Monetary tightening, rising interest rates, and a rising US dollar pose financial stability risks.
The decisive end to the decade of low-interest rates and quantitative easing has caused significant economic losses in asset values worldwide, raised dollar funding costs, and widened credit spreads.
So far, the adjustment to higher interest rates has occurred without a major systemic financial event with global implications. The forecasts assume central banks will avoid a disorderly tightening of financial conditions.
Geopolitical risks are elevated, though, and challenging to quantify. The Russia-Ukraine conflict will remain the major geopolitical risk to the broader macroeconomic picture.
While the attributed very low probability to the possibility of the conflict extending beyond Ukraine's borders, such an event would mean a significant escalation, creating additional and serious downside economic risks.
According to the house, geopolitical risks will increasingly drive economic policies worldwide as excellent power relations become increasingly confrontational.
Markets gained on a weekly basis after the new readings about inflation and the expected easing of the interest rate hiking in the US. S&P 500 +5,90%, Dow Jones Industrial Average +4,31%, Nasdaq Composite +8,84%, and DAX in Europe gained +5,68%.