In the latest reports published on Tuesday, Moody’s Investors Service cuts US and European GDP growth forecasts for 2022 and 2023.
now wait US real GDP growth of 2.1% in 2022 and 1.3% in 2023below May forecasts of 2.8% and 2.3%, respectively.
Tightening monetary and financial conditions to reduce stubbornly high inflation will slow economic growth.
Although Moody’s expects the inflation has a downward trend as growth weakens, it will remain high, falling from 9.1% in June to 7.0% at the end of 2022 and 2.3% at the end of 2023 in the United States.
The credit agency’s forecast for the euro zone is that the Real GDP grows 2.2% in 2022, followed by 0.9% in 2023below their May forecasts of 2.5% and 2.3%, respectively.”
“Our baseline forecasts assume that persistently high energy prices and widespread inflation will continue to compress real incomes and hold back consumer spending as the energy crisis drags on,” Moody’s said in its statement. .
“The main factors driving lower growth projections are: interruptions in gas supply and the uncertainty that will require an adjustment on the demand side; high inflation, which is taking a toll on consumer spending; Withdrawal of support for monetary policy by the European Central Bank (ECB); the tightening of global liquidity; and the moderation of external demand.
“Exist Significant downside risks to Moody’s forecasts in case Russia completely shuts down gas flows to Europe“, concludes the statement.
Source: Fx Street
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