Moody's Lowers its Predictions for US and European Economic Growth

“As the energy crisis continues, "our baseline predictions anticipate that persistently high energy prices and widespread inflation will continue to squeeze real earnings and depress consumption spending."

July 26, 2022 - 11:43 AM 305 views

Moody's Lowers its Predictions for US and European Economic Growth

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The GDP growth predictions for the US and Europe for 2022 and 2023 are cut by Moody's Investors Service in their most recent research reports, which were released on Tuesday.

Key Quotes

“As opposed to its May predictions of 2.8 percent and 2.3 percent, respectively, "now predicts US real GDP growth of 2.1 percent in 2022 and 1.3 percent in 2023."

"Slower economic growth will result from tighter monetary and financial conditions designed to lower stubbornly high inflation."

"Although Moody's anticipates that inflation would trend lower as GDP weakens, the rate will still be high, falling from 9.1% in June to 7.0% by the end of 2022 and to 2.3% by the end of 2023.

“In contrast to its May predictions of 2.5 percent and 2.3 percent, respectively, "Moody's baseline forecast for the euro area is for real GDP to rise 2.2 percent in 2022, followed by 0.9 percent in 2023."

“As the energy crisis continues, "our baseline predictions anticipate that persistently high energy prices and widespread inflation will continue to squeeze real earnings and depress consumption spending."

“The European Central Bank (ECB) has withdrawn its support for monetary policy, tighter global liquidity, dampened external demand, and gas supply disruptions and uncertainty are the key causes of the lower growth estimates. These variables will also necessitate demand to be adjusted.”

“If Russia entirely cuts off gas shipments to Europe, "there are significant downside risks to Moody's projections."

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