Moody's: The slow pace of global growth will continue in 2023 as well, expressed this estimate for 2024

Given the tight monetary stance of various central banks, it appears that the weakness in global growth will continue. Moody's Investors Services has said these things.

In its global macro outlook titled 'Global economic risks persist despite recent positive surprises', monetary policy tightening will weigh on economic activity and employment in most major economies.

The report said, “We estimate that the G-20 global economic growth rate will decline from 2.7 percent in 2022 to 2 percent in 2023.” Then in 2024, it will improve to 2.4 percent.

The report noted that while inflation will continue to moderate, a sustained decline in the central bank's targets is not guaranteed. For example, inflation in the US declined from 6.5 percent in December to 6.4 percent in January. In the previous month, it was 7.1 percent. However, it is still above the target of 2 percent.

The US central bank's policy rate is now in a target range of 4.50-4.75 percent, the highest level in 15 years, and was particularly close to zero in the early part of 2022. Raising interest rates is a monetary policy tool that usually helps to suppress demand in the economy, thereby helping to bring down the inflation rate.

The report envisions inflation in advanced economies staying above the central bank's targets for the better part of 2023 and 2024.

"We expect inflation to continue to decline in most G20 economies over the next year, subject to softening of demand from central bank actions," Moody's said. Moody's said central banks would keep interest rates on hold for longer than financial markets expected. “While it is clear that the end of monetary policy tightening is near, it is difficult to say how much more rate hikes would be appropriate and how long rates will remain restrictive,” he said.

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