Global economy will remain fragile next year, Moody’s says

The world economy has witnessed the lowest global growth this year since the 2009 recession, according to international rating agency Moody’s. It expects the economy to stay fragile as risks to credit conditions rise.

Although Moody's does not forecast recession in 2020, it has warned that such risks are building amid a worldwide backdrop of trade policy uncertainty.

“Recession risks will remain elevated in Europe and the US, while in China domestic rebalancing will continue to create challenges in maintaining the country's rapid growth,” it said.The agency noted the risks will be centered around the US-China trade conflict, Brexit-related uncertainty and the escalation of other bilateral disputes.

It also expects interest rates to remain low and yield curves to stay flat for several years going forward, with mixed credit effects by sector.

According to the US-based Moody's Investors Service, low rates will keep borrowing costs attractive for sovereigns and companies but will create a difficult operating environment for banks and insurers. They will also continue to encourage risk taking as investors reach for yield.

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