Daily Management Review

Moody's: Global economy slowdown will weaken the global credit market


01/30/2019


A slowdown in the global economy, higher financing costs, deteriorating liquidity and market volatility will weaken the global credit market, analysts at Moody's Investors Service say.



dflorian1980
dflorian1980
In addition, trade, political and geopolitical risks will increase amid increasing tensions between the US and China, and a slowdown in global growth will contribute to discussions about globalization and inequality, the rating agency reported.

"Of all the risk factors, US trade policy is the most powerful, large-scale source of global risk, which will have significant sectoral and regional consequences," said Michael Taylor, managing director and chief credit analyst at Moody's. "World GDP growth will remain stable, but China’s economic slowdown is likely to be more pronounced."

A more pessimistic view of the global economy leads to lower expectations of monetary policy tightening (monetary policy) by central banks of the leading countries of the world.

According to Moody's analysts, the US Federal Reserve will raise the interest rate in 2019 no more than two times, instead of three or four times predicted earlier, analysts say.

In turn, the ECB will postpone the increase in the deposit rate and the refinancing rate until 2020, while the agency had previously expected a tightening of monetary policy in the second half of this year. Waiting for similar actions from the Bank of Japan is not worth it either in this or the next year.

source: moodys.com






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