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Moody's expects GDP growth of G20 countries above 3%, warned of geopolitical risks

The rating agency Moody's Investors Service has left the growth forecast for the G20 economies at a slightly higher level - slightly above 3 % in the current and next years.

30.Aug.17 2:15 PM
By Daria Zaytseva


Moody's expects GDP growth of G20 countries above 3%, warned of geopolitical risks

However, warned about geopolitical risks, the consequences of US protectionism, the global trend of tightening monetary policy and China's measures to reduce public debt.

The rating agency said that, after the unexpectedly good data for the first half of the year, it raised forecasts for the growth of China's economy in 2017 to 6.8 % from 6.6 %, South Korea to 2.8 % from 2.5 %, Japan to 1, 5 % from 1.1 %. Although the agency raised the forecast for the PRC, it warned that the country's economy increasingly depends on the growth of lending. In May, the agency downgraded China's rating to A1, saying that the financial stability of the country's economy will weaken in the coming years.

Moody's is also waiting for the acceleration of GDP growth in the eurozone until the end of the year and revised upward forecasts for Germany, France and Italy.

However, the forecast for the US economy was revised downward to 2.2 % from 2.4 % in 2017 and to 2.3 % from 2.5 % in 2018. The agency pointed to the not justified forecasts of the US economy in the first half of the year and expectations that budget incentive measures will not be as large as previously thought.

The agency warned about the possibility of an escalation of tension on the Korean peninsula due to the DPRK's rocket tests, the strengthening of the "aggressive rhetoric" of the parties to the conflict and the "tough stance" of the Trump administration.

Financial markets Moody's warned of the risks of increased volatility after prices for some assets reached historic highs. The uncertainty of the future policy of the Federal Reserve and the ECB is also a threat to them: the central bankers said they are preparing to abandon unconventional incentive measures, but exact dates are unknown.

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