While overall virus-related concerns have eased as COVID infections have become less deadly, the surge in new infections in G-20 economies is a reminder that the emergence of newer and more dangerous variants still poses risks to the global economic outlook , global research and ratings agency Moody’s said in a report “Economic Pulse Check: Alternative Data Monitoring.”
Financial conditions are now less favorable as central banks around the world tighten monetary policy more aggressively by raising interest rates to curb rising inflation.
“Higher borrowing costs have increased pressure on households and businesses, raising risks to aggregate demand,” it said in the report.
Economic activity slowed further as inflation and tighter credit conditions dented consumer and business confidence, thereby eroding purchasing power.
The silver lining is that disruptions in the shipping industry and shortages of key inputs are slowly starting to resolve, and food prices are falling, which is easing inflationary pressures on the supply side to some extent, the report said.
