Moody’s lowers 2022 GDP forecast for advanced, emerging G20 economies

Rating agency revises up Turkey’s growth estimate for this year and next

Moody’s lowered its gross domestic product (GDP) growth forecast for advanced countries and emerging economies among G20 for the next year.

The global rating agency now estimates G20 advanced countries will collectively grow 5.8% in 2021 and 4.4% in 2022, after a 3.2% contraction in 2020, according to its Global Macro Outlook report released on Thursday.

The previous growth estimates in its August report were 6.2% for this year and 4.5% for the next year.

“Weaker-than-expected growth momentum and an upside surprise to inflation have dented some of the optimism surrounding the global economic recovery,” the latest report said.

“Over the course of 2022, however, we expect uncertainties with regard to the COVID-19 pandemic, supply chain imbalances and labor shortages to diminish, allowing the economy to enter a stable growth phase through 2023,” it added.

Emerging economies among G20 are now forecast to grow 7.3% this year, slightly up from the previous estimate of 7.2%. However, they are estimated to expand 4.8% next year, down from the previous estimate of 5.1%.

“The growth outlook for individual emerging market countries will depend on whether ongoing improvements in household consumption and business activity spur a new capital spending cycle, create employment, improve incomes and give way to sustained broad-based growth,” the report said.

Turkey’s growth estimate revised up

Turkey, on the other hand, saw an upward revision in its GDP growth forecast.

Moody’s now expects the Turkish economy to expand 9.2% and 4.8% in 2021 and 2022, respectively.

The rating agency’s previous estimates made in August for Turkey stood at 6% for this year and 3.6% for next year.

“Monetary and credit expansion and ample liquidity support continue to boost Turkey’s credit-fueled recovery,” the report said.

“However, the policies fueling headline economic growth come at the cost of exacerbated pre-pandemic vulnerabilities – wider external imbalances, rising corporate leverage, high inflation, and further depreciation of the lira,”it added.

Moody’s said it forecast an inflation rate of 19% for the end of 2021 in Turkey, and above 16% at the end of 2022.


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