Monday 10 December 2018

Global GDP to see 3.2pc growth in 2018: Moody’s

NEW YORK, November 16, 2017

Global GDP is estimated to grow at of 3.2 per cent in 2018 and 3.1 per cent in 2019, similar to 2017 and up from the 2.5 per cent growth achieved in 2016, Moody's Investors Service said in its 2018 cross sector credit conditions outlook.

Strong, broad-based global economic growth will benefit most rated sectors in 2018, it added.

"The improving outlook underscores the strength of the global economy overall," said Moody's associate managing director Elena Duggar. "Global credit conditions in 2018 will be defined by healthy economic growth and a supportive funding environment, which will help to balance against a build-up of longer-term risks."

"Nevertheless, secular shifts such as the demographic transition, rapid technological change and climate change will present new credit challenges," added Duggar.

Unlike in previous years, Moody's expects growth to be more broad-based and sustained in the year ahead. Growth in G20 advanced economies is expected to be stable, with growth of approximately 2.0 per cent in 2017, 2018 and 2019, compared with 1.5 per cent in 2016, while emerging markets will grow at a rate of 5.4 per cent in 2018 and 5.3 per cent in 2019, accelerating from the 5.0 per cent 2017 growth and the 4.4 per cent 2016 growth.

"Our outlook is more positive overall than last year," said Duggar. "While there is still uncertainty over trade policy and political risks, these risks have abated somewhat. Also, importantly, we have a stronger sense of the direction and timing for monetary policy."

A healthy global economic environment is setting the stage for a reversal of expansionary monetary policies in advanced economies. The cyclical economic recovery will be accompanied by uncertainty over the duration of the credit cycle amid a build-up of risks to financial stability after a decade of low interest rates. Moody's remains confident, however, that central banks will begin pursuing balance sheet normalization in 2018 and 2019.

In the report, Moody's identifies six themes that are likely to shape the global credit environment in 2018 and beyond. They include: growth, financial stability, political and geopolitical risk, technology and innovation, climate change and sustainability, and demographics.

Moody's view of technology and innovation, climate change, and demographics take a more prominent role in our assessment of future credit conditions.

Rapid technological change, for example, will continue to transform production processes, business models, and government regulation, all of which will impact credit fundamentals. Climate change and demographic trends, such as aging populations, also pose significant medium and longer-term challenges to growth on a global scale. The ability of governments, industries and market participants to adapt to these changes will determine if their creditworthiness remains resilient. – TradeArabia News Service

Tags: Moody’s | Global GDP |

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