Moody's Sees Global Growth Failing To Pick Up Steam Over Next Two Years

KUALA LUMPUR, Feb 18 (Bernama) -- Global growth will fail to pick up steam over the next two years as the slowdown in China, lower commodity prices and tighter financing conditions in some countries weigh on the economy, said Moody's Investors Service. In the quarterly report released Thursday, the rating agency said the downside risks to its forecast for gross domestic product growth of 2.6 per cent in 2016 and 2.9 per cent in 2017 for the G20 had increased since its last Global Macro Outlook in November. Furthermore, G20 policymakers in some countries had limited fiscal and monetary policy space to boost growth or mitigate these risks. "We expect global growth to rise only very modestly in 2016-2017," said Moody's Senior Vice-President and co-author of the report, Marie Diron. She said the negative impact of commodity producers' adjustment to persistently lower prices, a marked slowdown in China's imports and tighter financing conditions for some emerging markets would outweigh positive factors, such as accommodative monetary policy in Europe, Japan and the United States. "Where government budgets are hit by lower commodity prices and depreciating currencies fuel inflation, room to mitigate the downside risks is limited. "In Europe and Japan, elevated government debt continues to constrain fiscal policy while the efficiency of multiple rounds of quantitative easing is already being tested," Diron added. -- BERNAMA