Moody’s: the GDP growth forecast of the G20 countries has been increased
The forecast of the GDP growth of the countries with developing economies, which are the part of the “Group of Twenty”, has been improved by 0.2 points for 2016 and 2017, to 4.4% and 5% respectively by the international rating agency Moody’s Investors Service. This was reported in the Moody’s Global Macro Outlook, which is published every quarter.
Last year the growth was 4.4%. As Moody’s experts believe the growth prospects of developing countries’ economies have become more stable largely due to the fact that the GDP of Russia and Brazil is falling at a slower pace. Also, the stability is characterized by the assessment improving of the increase in the Chinese economy. Now, Moody’s expects China’s GDP growth to 6.6% in 2016 and 6.3% in 2017, while the earlier forecast was equal to 6.3% and 6.1%. The fact that the forecast has been improved is associated with significant stimulus measures in the monetary and fiscal policy of the state.
Russia’s GDP is forecast to fall by 0.5-1.5% on the results of the current year. Moody’s Global Macro Outlook predicts that the GDP is expected to be increased by 1-2% in the coming year. In May the agency estimated the decrease of the Russian economy by 1.5-2.5% in 2016 and its increase by 0.5-1.5% in 2017. Meanwhile, the prognosis for the G20 countries with developed economies has been slightly deteriorated. Now Moody’s estimates the growth of their GDP by 1.6% vs. 1.7%, which was expected in May. The forecast for the next year remained at 1.9%.
Moody’s has also lowered the growth estimate of the US GDP from 2% to 1.7% in 2016. The forecast for 2017 was left on the mark of 2.3%. The day before Moody’s has lowered the growth forecast of Germany’s, France’s and Italy’s economies due to the risks of Brexit, although the expectations for the euro zone have not been changed in general. The economy of the currency bloc is expected to grow by 1.5% in 2016 and 1.3 % in 2017.
The GDP growth in all G20 countries is estimated within 2-3% in 2016 and 2.5-3.5% in 2017. The analysts from Moody’s express expectations that the US Federal Reserve will raise the base interest rate once again at the end of 2016. This can lead to the quotes volatility of the largest number of assets, excluding stocks, bonds and currencies. Also, the rate increase in the United States can be provoked by the outflow of the foreign investments from the developing countries. Moreover, the countries with the substantial amount of debt denominated in foreign currencies could face a particularly vulnerable situation.
Moody’s emphasized the danger of political and geopolitical risks that were associated with the presidential elections in the United States as well as the continued danger of the contacts weakening among the EU countries and the exacerbated conflict in the South China Sea.