Moody’s: Global Economic Growth Will Continue to Lag Pre-2008

Economic growth rates for countries across the globe will generally continue to be lower than they were before the 2008 economic crisis, says Moody’s Investors Service in its Country Credit Statistical Handbook.

The credit ratings agency (CRA) says that across the world it finds world economies recovering, but with wide disparities in the rates of recovery.

The handbook contains historical time series since 2005 and forecasts for 2015 and 2016 for many of the quantitative indicators and ratios used by Moody’s sovereign risk analysts in the process of assigning and monitoring sovereign creditworthiness. It is published semi-annually in electronic format and in print.

“Economic growth across the world shows a marked downward shift compared to pre-crisis growth rates, and this is true for all regions of the world,” says Gabriel Torres, a Moody’s vice president and senior credit officer. The CRA defines 2005 to 2008 as the pre-crisis period and 2010 through today as the post-crisis period.

The drop in growth relative to pre-crisis levels is most marked in Eastern Europe and Central Asia, says Moody’s. In these regions, it estimates that average median growth will be 2.4% from 2010 to 2016, compared to a 6.4% average growth in 2005-2008.

Looking at the 129 sovereigns that it rates, Moody’s finds 78% of them show lower growth post 2009.

The CRA also says there has been a structural shift in fiscal balances across the globe, with the rated sovereigns, on average, currently running deficits of 2.6% of gross domestic product (GDP). Before the crisis, budgets were very nearly balanced, on average.

“Higher fiscal deficits have pushed debt generally higher, and median debt burdens rose across all regions of the world, with Western Europe the most affected,” says Torres.

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