Moody’s Investors Service is the latest organisation to revise its predictions for global growth in the coming year. Previously estimated at 3.1 percent, the expectation for economic growth among the G20 countries has now been reduced to 2.8 percent.
According to a press release published by the ratings agency on August 28, the downgrade reflects the prolonged negative impact of China’s economic slowdown. Moody’s also predicts less GDP growth for China in 2016, reducing it from a previously estimated 6.5 percent to 6.3 percent, due to declining exports and investment.
Experts believe that the worldwide slowdown could be due to structural shifts in the global economy
“Slower growth in China makes a significant rebound in commodity prices in the near term unlikely. A more prolonged period of low commodity prices will lead to muted export revenues and investment for commodity-exporting G20 economies,” states senior VP Marie Diron in the press release.
Continued negative growth is expected in emerging economies Russia and Brazil, while Japan and South Korea also face falling export demand from China in 2015.
The new forecast released by Moody’s falls in line with other figures recently published, indicating that the pace of the global economy has indeed slowed. The World Trade Monitor June 2015 report states that the first half of the year experienced the worst world trade levels since the 2009 financial crisis. According to the report, which was published by the Netherlands Bureau for Economic Policy Analysis on August 25, global trade fell by 0.5 percent during Q2, prompting a more avid debate as to whether globalisation has reached its peak.
Both sets of figures indicate that a three-decade long trend of hyperglobalisation has finally begun to unwind. For 30 years, global trade consistently grew at double the rate of GDP, which can be largely attributed to rapid developments in technology and transportation. Yet for the second year in a row now, world trade will grow at around the same rate or less than GDP growth.
Experts believe that the worldwide slowdown could be due to structural shifts in the global economy, which include an attempt by China to transition from an export-driven economy and new energy dynamics in the US. Despite mounting indications suggesting that globalisation has in fact reached its peak, there are no signs at present that the trend is in reverse, nor that previous levels will ever recur.
