MOODY’S FORECASTS SLUGGISH RECOVERY AS GLOBAL MACRO-ECONOMIC SCENARIO FOR 2010
PanARMENIAN.Net
12.01.2010 11:30 GMT+04:00
/PanARMENIAN.Net/ Moody’s Investors Service forecasts a sluggish
recovery as the most likely global macro-economic scenario for 2010.
In 2010 update of its report series entitled "Moody’s Global
Macroeconomic Risk Scenarios", Moody’s says that it does not expect
the global economy to rebound strongly in 2010, but rather to return to
trend growth rates, with persistent unemployment and budget deficits.
This is in line with the "hook"-shaped recovery scenario which Moody’s
introduced in May 2009 and which assumed that the crisis will leave
enduring scars and that many economies will not return to their
previous output paths.
According to Moody’s new report, the sluggish recovery will be
characterized by a lack of homogeneity in the economic rebound across
different regions. "In most advanced economies, the recovery will
be fragile because of numerous headwinds – especially those related
to the expected challenges in sovereign risk in 2010," says Pierre
Cailleteau, Managing Director of Moody’s Global Sovereign Risk Group.
Indeed, Moody’s new Macroeconomic Scenarios report should be read in
conjunction with its recently published "Sovereign Risk: Review 2009 &
Outlook 2010" (December 2009) as Moody’s economic outlook is closely
intertwined with its outlook for sovereign risk.
Another factor is that the combination of lower levels of activity –
given the significant output losses – and diminished trend growth in
many regions will have an important impact on credit. "The world has
more or less tacitly opted for financial stability at the expense of
economic vitality – and this will make the absorption of large public
debts more challenging," explains Mr. Cailleteau.
Moody’s report also identifies at least three downside risks – albeit
of varying probability – to its hook-shaped global rebound scenario.
The first is that of governments and central banks exiting
high-stimulus policies in a disorderly fashion, leading to an
abrupt increase in long-term interest rates and/or sharp currency
realignments. The second is that financial institutions are unable
to rebuild capital buffers at a sufficient speed to withstand
the remaining economic and financial threats. The third and least
probable downside risk is that of an unexpected decline in China’s
growth dynamic.
Moody’s Investors Service is among the world’s most respected
and widely utilized sources for credit ratings, research and risk
analysis. Moody’s commitment and expertise contribute to stable,
transparent and integrated financial markets, protecting the integrity
of credit. In addition to our core ratings business, Moody’s provides
research data and analytic tools for assessing credit risk, and
publishes market-leading credit opinions, deal research and commentary,
serving more than 9,300 customer accounts at some 2,400 institutions
around the globe.
Credit ratings and research help investors analyze the credit risks
associated with fixed-income securities. Such independent credit
ratings and research also contribute to efficiencies in fixed-income
markets and other obligations, such as insurance policies and
derivative transactions, by providing credible and independent
assessments of credit risk.
Moody’s default studies validate our predictive ratings. Our published
research and investor briefings draw thousands of attendees each
year and keep investors current with the rationale underlying our
credit opinions.
In addition to its ratings services, Moody’s publishes investor
oriented credit research, including in-depth research on major
debt issuers, industry studies, special comments and credit opinion
handbooks. Moody’s maintains offices in most of the world’s major
financial centers and employs approximately 3,000 people worldwide,
including more than 1,000 analysts. The firm also has expanded into
developing markets through joint ventures or affiliation agreements
with local rating agencies.
Customers include a wide range of corporate and governmental issuers of
securities as well as institutional investors, depositors, creditors,
investment banks, commercial banks, and other financial intermediaries.
From: Baghdasarian