The global economy is more fragile amid record inflation, slowing growth

BENGALURU : Moody’s Analytics on Monday lowered its forecast for global economic growth to 2.7% for 2022 from 4.2% forecast in January, citing increased risks of stagnant inflation around the world. gender. The global environment has become more fragile as record-high inflation continues to gain momentum and growth decelerates, it said.

It has forecast global growth will slow to 2.3% in 2023 from 3.6% previously estimated.

In its Global Outlook: Global Economy on Edge report, Moody’s Analytics warned that while predicting that the global economy will grow in 2022, any policy mistakes or additional risks will increase the risk of a global recession in the next 12 months higher than currently assessed, quantified, assessed.

“Inflation risks have increased worldwide, but a stagnant inflation environment will take months to materialize… Business sentiment remains restrained and accommodative,” the agency said in a report. with the global economy avoiding a recession,” the agency said in a report.

It turns out that the negative supply shock caused by the outbreak of the Russo-Ukrainian war remains the main risk to global growth this year. “However, rising geopolitical tensions in Taiwan, stalemate in China, a cost-of-living crisis, rising borrowing costs and the threat of energy shortages in Europe highlight the fragility of global economy,” the report said.

Performance remains uneven among major world economies including US, China, Japan, India and negative supply shock due to outbreak of Russia-Ukraine war remains the main risk to growth. global growth this year of Western Europe’s five largest economies, it said. “Outcomes will continue to differ through 2023 because of different trade and investment linkages with Russia and Ukraine, particularly in relation to energy products,” according to the report.

Rising inflation globally has increased the risk of stalling inflation, but a stagnant inflation environment will take months to materialize and its likelihood varies by region and by country. family.

We broadly define stagnant inflation as the consumer price index, inflation at least 1 percentage point above the central bank’s equilibrium target, unemployment at least 1 percentage point above the natural rate percentage points and this lasts for six to 12 months,” it said.

Most of the major economies meet some of these criteria, mainly those related to price pressures, but labor market weakness and overall survival are yet to be observed. see, the report noted.

Europe would be very vulnerable to stalling inflation, with the UK at greater risk overall in the region, according to the report.

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