In 2023, Moody’s Investors Service anticipates that the cumulative tightening of monetary policy by various central banks will cause global growth to continue to slow.
In its global macro outlook titled “Global economic risks persist despite recent positive surprises,” Moody’s stated that the tightening of monetary policy will have a negative impact on economic activity and employment in the majority of major economies.
“We forecast G20 global economic growth will downshift to 2.0 per cent in 2023 from 2.7 per cent in 2022, and then to improve to 2.4 per cent in 2024,” it said in the outlook report.
Inflation, the report said, will continue to moderate, but a sustained decline to central bank targets is not guaranteed.
For instance, inflation in the US moderated to 6.4 per cent in January from 6.5 per cent in December, and 7.1 per cent the previous month but still is way above the 2 per cent target.
The policy rate of the US central bank is currently in its target range of 4.50–4.75 percent, which is the highest level in 15 years. Of note, it was almost zero in the early months of 2022.