Moody’s expects a 3% economic growth of G20 countries 30.08.2017

The rating agency Moody's Investors Service left the growth forecast for the G20 economies at the previous level - slightly above 3% in the current and next years, but warned about geopolitical risks, the consequences of US protectionism, the global trend of tightening monetary policy, and China's measures to reduce public debt.

The rating agency said that, after the unexpectedly good data for the first half of the year, it raised its forecasts of economic growth in China in 2017 to 6.8% from 6.6%, South Korea to 2.8% from 2.5%, Japan to 1.5% from 1.1%. Although the agency raised the forecast for China, it warned that the country's economy increasingly depends on the growth of lending. In May, the agency downgraded China's rating to A1, saying that the financial stability of the country's economy will weaken in the coming years.

Moody's is also waiting for the acceleration of GDP growth in the eurozone until the end of the year and revised upward forecasts for Germany, France, and Italy.

However, the forecast for the US economy was revised downward to 2.2% from 2.4% in 2017 and to 2.3% from 2.5% in 2018. The agency pointed to less justified forecasts of the US economy in the first half of the year and expectations that budget incentive measures will not be as large as previously thought.

"The balance of risks has become more favorable than at the beginning of the year," Moody's said.

"However, we note the risks associated with the conflicts on the Korean peninsula, the South China Sea, and the Middle East."

The agency warned about the possibility of an escalation of tension on the Korean peninsula because of the DPRK's missile tests, the strengthening of the "aggressive rhetoric" of the parties to the conflict and the "tough stance" of the Trump administration.

Moody's also reported on "renewed aspirations" to resolve bilateral disputes, within which one of the parties - the US administration - accuses several countries of unfair trade policies. Trade restrictions can damage economic growth.

Financial markets Moody's warned of the risks of increased volatility after prices for some assets reached historic highs.