ANKARA
Credit rating agency Moody’s said on Tuesday that the strong dollar makes some countries such as Turkey and South Africa more vulnerable to negative shocks than the others.
In its quarterly Global Macro Outlook report, Moody’s said that the anticipated tightening of US monetary policy comes at a time when most other central banks are easing policy or maintaining their loose stance.
"This unusual divergence reflects different prospects for growth and inflation around the world," the report said.
"While prospects of robust growth point to a gradual tightening of monetary policy and higher yields in the US, economic prospects are subdued in many other regions," says Marie Diron, Moody's Senior Vice President and author of the report. "The outcome is likely to be increased divergence between those economies that have built up resilience, like the US and India, and those that are vulnerable to negative shocks, like Brazil, South Africa and Turkey."
Moody's expects G20 Gross Domestic Product growth of 2.8 percent in 2015, broadly unchanged from last year, before rising to around 3 percent in 2016.
"This gap will fuel shifts in capital flows and currency values and affect the global economic outlook. Countries such as Turkey and South Africa are more vulnerable to the strong US dollar and the changes in capital flows that it reflects," the report said.
The weaker euro and lower oil prices is forecast to give a boost to the euro area economy, with GDP growth of 1.5 percent in both 2015 and 2016, up from Moody's previous estimate in the last outlook. The rating ageny said that lower oil prices and the weaker euro will boost growth in the short term.
However, Moody’s warned that there is uncertainty over Greece's negotiations with its international creditors and its future membership of the euro area.
"A Greek exit, which is not Moody's baseline scenario, would be very negative for the Greek economy. Since the debt crisis of 2012, the European Central Bank has strengthened its ability to respond to a financial shock, while euro area countries have reduced their trade and financial links with Greece, reducing the potential impact of a Greek exit on other euro member states," the credit rating agency said in its report.
