Recession risks will remain elevated in Europe and the US amid US-China trade disputes, Brexit-related uncertainty and the escalation of other bilateral disputes.
Global economy to stay fragile, Moody's. (Photo: iStock)
The US-based global rating agency, Moody’s Investors Service, on Tuesday released the latest report on economic outlook stating, the global credit conditions in 2020 will remain fragile as a result of growing risks of an economic downturn, trade policy uncertainty and the effects of an unpredictable political and geo-political environment.
As per the report, Moody does not expect a recession in 2020, however, recession risks are building up.
The global economy has witnessed the lowest global growth in 2019 since the 2009 recession.
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“Recession risks will remain elevated in Europe and the US, while in China domestic rebalancing will continue to create challenges in maintaining the country’s rapid growth,” Moody’s noted.
Furthermore, sporadic episodes of heightened financial market volatility will flare up as long as trade uncertainty lingers.
Moody’s expects interest rates to remain low and yield curves to remain flat for several years going forward, with mixed credit effects by sector.
Low rates will keep borrowing costs attractive for sovereigns and companies but will create a difficult operating environment for banks and insurers. Moreover, low rates will also continue to encourage risk-taking as investors reach for yield.
(With inputs from agencies)
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