Moody's expects G20 economic growth to slow this year

International credit rating agency Moody's reported that it expects G20 economic growth, which was 2.9 percent last year, to decline to 2.4 percent in 2024. Moody's published the February update of its Global Macro Outlook 2024-25 Report under the title "G20 economies' growth to stabilize at slightly lower levels in 2024." The report stated that the global economy has transitioned to a post-Covid-19 balance with the steady normalization of economic activities in developed and emerging markets, and that a soft landing seems possible for many developed economies due to good factors such as effective policy maneuvers, improving supply-demand balances, and mild winters in Europe. In addition to the robust US economy, the report pointed out that sustainable and stronger-than-expected recoveries in many developing countries after the pandemic created a constructive growth picture, and noted that the US Federal Reserve (Fed) and the European Central Bank (ECB) will probably start cutting interest rates in the second quarter. The report emphasized that geopolitical risks and inflation continue to pose potential threats to the economic outlook, and that the global production and trade environment will develop in harmony with geopolitical changes. The report stated that G20 global growth is likely to decline compared to 2022 and 2023 levels, and that G20 economic growth, which was 2.9 percent last year, is projected to be 2.4 percent in 2024 and 2.6 percent in 2025. The report noted that advanced G20 economies are expected to grow by 1.5 percent this year, 1.6 percent next year, and developing economies by 3.8 and 3.9 percent, respectively, with Argentina being the only G20 economy likely to contract this year. The report noted that major central banks are on the path to lowering interest rates The Fed, ECB and the Bank of Japan (BoJ) are on the path to lowering and normalizing interest rates, and emphasized that provided that inflation remains on a downward trajectory, major central banks will begin to normalize monetary policy in due time. The report stated that Moody's maintained its expectation that the Fed would reduce interest rates by 100 basis points to 4.25-4.50 percent in 2024 and make further reductions in 2025, and that the ECB was expected to begin policy normalization in the second quarter. The report, which drew attention to the fact that macroeconomic risks had decreased compared to the previous year, stated that geopolitical risks had come to the fore. The report stated that inflation, uncertainty regarding the final level of interest rates, and vulnerabilities in the financial sector were among the main macroeconomic and financial risks, and that geopolitical developments continued to pose risks to commodity markets and global trade. The report emphasized that the ongoing Russia-Ukraine war, conflicts in the Middle East, and tensions across Asia were adding serious uncertainties to regional and global growth, and explained that domestic economic and trade policies and technology transfers would also be shaped by foreign policy. Turkey is expected to grow by 2.5 percent this year Moody's revised its growth forecasts upwards for the US, Indian and Russian economies and the G20 as a whole, while lowering its expectations for the Eurozone, Germany, Saudi Arabia and Argentina. The credit rating agency's report noted that the Turkish economy is expected to grow by 2.5 percent this year and 3 percent next year.