S&P sees downside risks after 2022 started with a brisk economic growth, as the Ukraine-Russia conflict starts affecting global economic stability.
“We have lowered our GDP growth forecast to 3.6% globally, 3.2% in the U.S., and 3.3% in the eurozone,” said S&P Global Chief Economist Paul Gruenwald. “We think China’s policy response will keep growth stable at around 5%.”
The most affected economy of the regions tracked by S&P will be the Eurozone which saw its growth expectations reduced by 1.1% because of the war in Ukraine. US growth was primarily negatively impacted by rising interest rates and inflation, while the Asia-Pacific region is relatively insulated.
“Inflation has moved front and center as a policy challenge, especially in the U.S. where the Fed tightening cycle is the main factor behind the growth slowdown for now,” noted the ratings agency in a press release. “Higher U.S. dollar rates will tighten financial conditions, moderate growth, and spill over to other economies, while the European Central Bank tightening will be much more gradual.”
According to a IMF forecast from January 2022 global GDP was expected to be 4.4% in 2022 showing how quickly expectations are souring.