Critical warning from Moody’s: It also concerns Turkey

International credit rating agency Moody's has published its Global Macro Outlook 2024-25 report titled "G20 growth dynamics diverge amid ongoing global slowdown."

The report stated that global growth will slow in 2024 as high interest rates permeate the real economy through credit channels.

Noting that inflation will continue to cool as demand slows in 2024 due to central banks maintaining a tight policy stance, the report recorded that global growth is expected to strengthen in 2025, provided there are no unexpected shocks.

The report stated that the growth rate of G20 economies is expected to be 2.8 percent this year, 2.1 percent next year, and 2.6 percent in 2025.

In its forecasts published in August, Moody's had projected that G20 economies would grow by 2.5 percent this year and 2.1 percent next year.

The report indicated that G20 advanced economies are estimated to grow by 1.7 percent this year, 1 percent next year, and 1.8 percent in 2025, while emerging market economies are expected to grow by 4.3 percent this year, 3.7 percent next year, and 3.8 percent in 2025.

US ECONOMIC GROWTH EXPECTED TO SLOW NEXT YEAR

Stating that the economic slowdown will be uneven, the report expressed that US economic growth remains strong but will slow in 2024. The report noted that the growth forecast for the US economy has been raised from 1.9 percent to 2.4 percent for this year, while it has been maintained at 1 percent for next year. The US economy is estimated to grow by 2 percent in 2025.

The report stated that the Eurozone took a harder hit in 2023 and that its economic growth will remain weak in 2024, noting that the growth forecast for the region's economy has been maintained at 0.7 percent for this year, while it has been lowered from 1.2 percent to 1.1 percent for next year. The Eurozone economy is projected to grow by 1.7 percent in 2025.

The report also conveyed that the Chinese economy is expected to reach its 5 percent growth target in 2023, but growth is estimated to decline to 4 percent in 2024 and 2025.

REVISION IN TURKEY'S GROWTH FORECAST

In Moody's report, it was recorded that the Turkish economy is expected to grow by 4.2 percent this year, 2.6 percent next year, and 3 percent in 2025.

The credit rating agency had previously projected that the Turkish economy would grow by 4.2 percent this year and 3 percent next year.

On the other hand, the report mentioned that the recent rise in bond yields will partially reverse, and it was stated that the US 10-year bond yield is expected to fall to its long-term equilibrium of around 4 percent in 2024 as slowing growth and inflation bring interest rate cuts closer.

The report noted that with the downward trend in inflation, policy rates for major central banks have reached their peak.

Stating that inflation will continue to decline, the report expressed that inflation is expected to return to target in most G20 economies by the end of 2025.

The report warned that climate or geopolitical events could lead to fluctuations stemming from sudden spikes in energy and food prices.