Borrowing rates

Global financial conditions deteriorate as borrowing rates rise and economic growth slows: Moody’s

According to Moody’s Investors Service, the protracted war between Russia and Ukraine has raised borrowing rates and weaker economic development have all contributed to worsening global financial conditions.

He said rising oil and food prices caused by the situation in Ukraine are eroding consumers’ purchasing power, driving up business input costs and weakening investor confidence.

With borrowing costs rising and economies yet to fully recover from the COVID-19 pandemic crisis, many frontier market sovereigns would find it difficult to service their debt, the report said. report.

According to a Moody’s report, “Global credit conditions have turned more negative and will be tighter for the rest of the year due to higher borrowing costs, the possibility of a protracted military conflict between Russia and Ukraine, from significantly slower global economic growth, higher energy and commodity prices, further supply chain disruption and increased volatility in financial markets.”

Financial market conditions are tightening synchronously across all continents as central banks in many countries begin to raise interest rates in response to excessive inflation. The US-based rating service predicted that “financial conditions will continue to tighten as interest rates rise”.

From its March forecasts of 3.6% and 3%, respectively, Moody’s cut its economic growth forecast for G-20 countries to 3.1% for this year and 2.9% for the next year. In order to avoid a further rise in inflation expectations, central banks in both developed and developing countries will continue to raise interest rates, according to Moody’s.