Home / Africa/International / Moody’s revises forecast for G20 economies’ growth down to 2.8%

Moody’s revises forecast for G20 economies’ growth down to 2.8%

Share this with more people!

Moody'sMoody’s Investors Service has made a downward revision of its GDP growth forecast in the G20 economies next year, from 3.1 to 2.8 per cent, due to China’s economic slowdown and anticipated associated decline in commodity prices.

Moody’s has slightly revised downwards its GDP growth forecast for China in 2016, from 6.5 per cent to 6.3 per cent.

It noted on Friday in a communication copied to ghanabusinessnews.com that recently published economic indicators show that China’s slowdown in exports and investment has continued into the third quarter of 2015, and signs of weakening employment growth in China also point to a more marked and broadly-based deceleration in its economy than previously expected.

Moody’s believes that “ongoing policy support from the Chinese government is likely to only partly offset the underlying slowdown in the Chinese economy.”

The rating agency said the revision which mainly reflects the impact of China’s economic slowdown forecast and more prolonged decline in commodity prices on G20 producers, is only an update to the markets and does not constitute a rating action.

“Slower growth in China makes a significant rebound in commodity prices in the near term unlikely. A more prolonged period of low commodity prices will lead to muted export revenues and investment for commodity-exporting G20 economies”, Marie Diron, a Senior Vice President at Moody’s said.

Moody’s now expects negative GDP growth in 2016, in Brazil and Russia, extending the 2015 recessions, with the recent fall in commodity prices, currency depreciation and what Moody’s believes to be “an already unfavourable domestic economic environment.”

Korea and Japan are also projected to face dampened demand from China for their manufactured goods exports as the economic slowdown will likely affect corporates’ and consumers’ willingness and ability to spend.

Moody’s forecasts for Korea, GDP growth of around 2.5 per cent in 2015 and 2016, whilst for Japan it forecasts GDP growth of around 0.5 per cent in 2015 and 1 per cent in 2016.

By Emmanuel Odonkor

Share this with more people!

Check Also

UNAIDS, Samba Peuzzi raise alarm on HIV among children in West and Central Africa

As part of a new campaign to stop new HIV infections among children and ensure …