The June 2020 update of its Global Macro Outlook, released on Monday, expected a marginally stronger rebound at 6.9% in 2021, as opposed to 6.2% in the April update.
The global rating agency lowered it’s estimates for almost all major economies. For the G20 advanced economies, the report projected a contraction of 6.4% in 2020 followed by a 4.8% recovery in the coming year.
In April, Moody’s had projected the output for this group of economies at -5.8% for the year.
For the G20 emerging economies, the report projected a contraction of 1.6% for the calendar year. Removing China, this figure would have been worse at -4.7%, it said.
China is one of the few countries that have not seen a downgrade from the April report, with Moody’s sticking to its 1% forecast for the country this year.
On the other hand, most of the major western economies saw their projections declining further. The effect of lockdowns on activity in the second quarter of the year would be larger than previously thought, it said.
“We have our 2020 growth forecast down from our previous projections in April for a number of countries, including Germany, France, Italy, the UK, Canada, Brazil, India, Indonesia, Saudi Arabia and Argentina….The downward revisions for 2020 mostly reflect a reassessment of the effects of the pandemic in the first half of the year, based on incoming data,” the report said.
Further, whereas earlier reports have considered a second wave of Covid-19 infections as a worst-case scenario, the latest Moody’s report has included this in its baseline scenario.
“A critical assumption in our baseline expectations for a gradual global economic recovery is that new coronavirus outbreaks are likely in all countries, but that they will not result in a reimposition of widespread lockdowns,” Moody’s said.