Rates Shock Puts The Global Economy On A Slower Path, Says Report

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S&P Global has revised down its 2022 growth forecasts for major economies, revealing a significant adjustment in its latest report, "Global Economic Outlook Q3 2022." China's GDP growth forecast has dropped by 0.9 percentage points to 3.3%, attributed to COVID-lockdowns. While the U.S. is expected to avoid recession, high prices and increasing borrowing costs are threatening economic stability. The eurozone's growth forecast has also been slightly reduced due to rising inflation concerns.

Positive

• U.S. economy projected to avoid recession in 2022.

Negative

• China's GDP growth revised down to 3.3%, a 0.9 percentage point drop.
• Increased inflation expectations leading to lowered forecasts for the eurozone.
• High prices negatively affecting consumer purchasing power.
• Aggressive Federal Reserve policies increasing borrowing costs, creating economic uncertainty.

NEW YORK, June 29, 2022 /PRNewswire/ -- We have cut our 2022 growth forecasts for most large economies, outlined in a report we published today, "Global Economic Outlook Q3 2022: Rates Shock Puts The Economy On A Slower Path."

"Things have changed, and not for the better," said S&P Global Chief Economist Paul Gruenwald.

China has had the biggest downward revision. The country's economy will likely expand 3.3% this year, a 0.9 percentage point drop from our growth assumption in May. We attribute this low growth to the effects of COVID-lockdowns.

Economic momentum should protect the U.S. economy from recession in 2022. But the weight of extremely high prices is damaging purchasing power and, as aggressive Federal Reserve policy increases borrowing costs, it's hard to see the economy walking out of 2023 unscathed.

We have lowered our GDP growth forecasts modestly for the eurozone economy, largely on heightened inflation expectations.

"Things have changed, and not for the better," said S&P Global Chief Economist Paul Gruenwald. "The main twist has been the about-face in the inflation narrative. With the wisdom of hindsight, we now see that central banks waited too long to raise rates, putting too much weight on supply-side explanations, or putting too much weight on labor market outcomes, or both."

This report does not constitute a rating action.

Media Contact:	Orla OBrien, Boston +1 (857) 407-8559;
	orla.obrien@spglobal.com

S&P Global Ratings is a division of S&P Global (NYSE: SPGI), which provides essential intelligence for individuals, companies and governments to make decisions with confidence. For more information, visit www.spglobal.com/ratings.

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SOURCE S&P Global

FAQ

What are the revised growth forecasts for China reported by SPGI?

SPGI has revised China's GDP growth forecast down to 3.3%, a 0.9 percentage point decrease from previous assumptions.

How does the U.S. economy's outlook look according to SPGI's report?

SPGI suggests that while the U.S. economy is expected to avoid recession in 2022, high prices and aggressive Federal Reserve policies pose significant risks.

What impact does inflation have on the eurozone's growth forecast?

SPGI has lowered its GDP growth forecast for the eurozone primarily due to heightened inflation expectations.

What is the significance of the report published by SPGI on June 29, 2022?

The report highlights the economic challenges facing global economies due to inflation and rate hikes, indicating a slower growth path.