Moody's downgrades global sovereign outlook for 2020 to negative

COLOMBO(News 1st) - Rating agency Moody’s has cut its global sovereign outlook for 2020 to ‘negative’ from ‘stable’, saying disruptive and unpredictable world politics would slow growth and increase the risk of economic and financial shocks. Moody’s, which has already slapped downgrade warnings on Britain, South Africa, India, Mexico, Turkey, and Hong Kong, said there were three main drivers behind the move. Moody’s now expects growth in the G20 group of top world economies to stay around 2.6% next year, after 3% in 2018. The report adds Unpredictable politics and trade wars such as that between the United States and China would weaken open and commodity-exporting economies. The increasingly antagonistic environment was also likely to damage global and national institutions, which together with lower growth, raises the probability of crises but reduces the capacity to deal with them. The report said, there are few silver linings and a rising risk of more negative outcomes. Unpredictable politics create an unpredictable economic and financial environment. While the starkest example remains the US-China trade spat, tensions that diminish growth have also risen in the Gulf, between Japan and Korea, India and Pakistan, the US and the EU, and the EU and Britain.