Global rating agency Moody’s raised its U.S. economic growth forecast for this year but cut its estimate for next year for China.
“We have raised our U.S. growth forecast to 1.9% in 2023 from 1.1% in our May outlook, recognizing strong underlying economic momentum,” Moody’s said in a report.
The global rating agency, which is now the only one of the big three agencies with an “AAA” rating for the United States, maintained its growth forecast for 2024 at 1%, saying that high interest rates will act as a brake on the economy.
“We believe it will be difficult for the Federal Reserve to achieve a sustained fall in inflation to its 2.0% target if current economic conditions persist. A few quarters of below-trend growth are needed, in our view, to avoid overheating,” Moody’s said.
“China faces considerable growth challenges stemming from weak business and consumer confidence amid economic and monetary/political uncertainty, continued real estate problems, and an aging workforce,” Moody’s said.
Moody’s maintained its growth forecast for this year at 5%; however, it cut its forecast for 2024 to 4% from 4.5% previously.
“Data from China suggests that the economic recovery following a prolonged zero COVID policy remains weak, as the reopening momentum seen in March, April, and May appears to be waning,” the agency said.
