Top 3 Credit Rating Agencies Lower Global Growth Rate Below 1% (Comprehensive)

S&P, Fitch at 1% Range... Moody's -0.5% "Unprecedented Shock from COVID-19"

[Image source=AP Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Moody's has revised the growth rate of the Group of Twenty (G20) to negative, lowering the global economic growth forecasts of the three major credit rating agencies to below 1%. Due to the economic recession caused by the contraction of corporate activities and consumption following the impact of the novel coronavirus disease (COVID-19), it is expected that the economic growth rates of major countries will fall significantly compared to previous estimates.

On the 25th (local time), Moody's projected in its international economic outlook report that the G20 economic growth rate (GDP) this year will record -0.5% due to the recession caused by the impact of COVID-19. Moody's economic growth forecast for this year, made in November last year, was 2.6%. Moody's stated, "The G20 economies are experiencing an unprecedented shock and are expected to gradually return to a recovery trend only after the second quarter of next year."

Earlier, S&P downgraded its global GDP growth forecast from 3.3% to 1.5%, and Fitch also lowered its previous forecast of 2.5% by nearly half to 1.3%. Brian Coulton, Fitch's chief economist, explained, "We have already entered the territory of a global recession." All three major credit rating agencies expressed concern that China's economic growth rate, where COVID-19 infections began, will record a significantly lower 3% range than previously expected, greatly hindering global economic growth.

Moody's forecasts China's GDP growth rate this year to be 3.3%, Fitch estimates 3.7%, and S&P warns that under optimistic scenarios such as an early end to COVID-19, it could be 3.2%, but under pessimistic scenarios due to prolonged COVID-19, it could fall to 2.7%. S&P explained, "China has already suffered considerable economic damage in the first quarter, and the impact is expected to continue through the second quarter, with recovery beginning only in the second half of this year. Although Chinese authorities do not appear to plan large-scale fiscal stimulus immediately, they are expected to continue intervening to maintain liquidity."

Regarding the European region, where COVID-19 is raging, all three agencies presented pessimistic forecasts. Moody's projected the GDP growth rate of Eurozone countries this year at -2.2%, S&P at -0.5%, and Fitch at -0.4%, with all three expecting negative growth in Eurozone countries. Moody's predicted, "The consumption contraction caused by the COVID-19 shock will be difficult to recover from in the short term, and the effects of fiscal and monetary policy support will also begin to appear in earnest from the second quarter of next year."

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