Moody's "G20 Economic Growth Rate Forecast at -4.6% This Year... Downgraded Due to Prolonged COVID-19"

[Image source=EPA Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Credit rating agency Moody's has lowered its economic growth forecast for this year for the Group of Twenty (G20), citing the prolonged COVID-19 pandemic and the economic repercussions being greater than expected.

In a macroeconomic outlook report released on the 22nd (local time), Moody's projected that the real gross domestic product (GDP) of the G20 will decrease by 4.6% this year. This is 0.6 percentage points lower than the growth forecast of -4.0% made in April. The economic growth rate for next year was revised upward from the previously forecasted 4.8% increase in April to a 5.2% increase.

Moody's explained that it revised the economic growth forecasts for some countries such as Germany and France from those issued in April, stating, "Our forecast estimated about an 8.7% decrease in growth over two quarters, from the fourth quarter of 2019 to the second quarter of this year."

Moody's significantly lowered the growth forecasts for European countries that were mainly hit hard by COVID-19. The UK's GDP contraction rate was sharply revised down from -7.0% to -10.1%, and France (-6.3% → -10.1%), Italy (-8.2% → -9.7%), and Germany (-5.5% → -6.7%) were also significantly downgraded. The economic growth rate for emerging economies within the G20 is projected at -1.6% this year and 5.0% next year. Previously, Moody's had expected emerging market GDP to decline by 1.0% this year. Among emerging countries, forecasts for India (-3.1%) and Brazil (-6.2%) were lowered.

The growth forecast for South Korea was maintained at -0.5%, as before. This is the second-best level among G20 countries after China (1.0%). Next year, growth is expected to be 2.8%, with inflation rates projected at 0.8% this year and 1.8% next year, and unemployment rates expected to remain at 4.2% for both this year and next.

Moody's pointed out, "The scale and composition of policy support varied by country, resulting in differences in recovery," adding, "Although financial markets have mostly recovered, the risk of turmoil remains high, and premature withdrawal of policy support could lead to financial stability risks."

This content was produced with the assistance of AI translation services.