Global Growth Forging Slowly Ahead, but Variety of Risks Could Upend Stability

A year’s worth of slow but steady growth in the world’s industry sectors as tracked by Moody’s Investors Service has led the ratings agency to view overall outlooks for the sectors in a positive, if “modest and fragile,” light.

Global industry sector outlooks reflect expectations for fundamental business conditions over the coming year to year and a half; at the end of the second quarter 2017, nine sectors’ outlooks were positive, six were negative and 39 were stable.

"The current distribution pattern of industry sector outlooks reflects a low-growth global economy that isn't particularly resilient to shocks," said Moody's Senior Vice President Bill Wolfe. "While we expect median cash flow to accelerate slightly over the next year, the global economy also faces growing uncertainty from potential geopolitical event risks."

Moody’s now sees global median EBITDA growth at 4.0%, after three years of growth from 3.0% to 3.5%, Wolfe said. Advanced and developing economies are progressing and commodity prices are stabilizing. However, “…unusual monetary conditions continue, with interest rates rising in the U.S. and quantitative easing and negative interest rates persisting in Europe and other advanced economies.”

Trade is increasing slowly as well, though weak global demand, protectionism and political risks in the U.S. and Europe could hamper greater growth, Moody’s said. Other potential risks to global growth include evolving technologies that could disrupt established industries, shifting U.S. trade policy, a quick rise in U.S. interest rates or suddenly strengthening dollar, a quick downturn in China and economic fragmentation in Europe.

– Nicholas Stern, senior editor

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