The Fitch rating has cut the world’s GDP growth by 0.7pp to 3.5% in 2022.
Like every year, Fitch Ratings conducts its unique and trustworthy economic forecasts, but this year’s forecasts are somehow discouraging and alarming. The Ukrainian war started on the 26th, while some experts believe that the war is in its final days. Ukraine’s prescient Zelensky is saying that the end is near.
Zelenskyy says that Ukraine is important to Russia for future expanding plans in Europe. Yet, for the sake of his people and country, the president is willing to discuss any solution diplomatically. Ukraine is willing to not become a NATO member if Russia stops its invasion and military attack on Ukraine.
According to Fitch’s global GDP rating, the war is pushing inflation and adding fuel to the fire. That will somehow slow down the economic rebound in the U.S and Europe.
According to Fitch, US GDP growth will be reduced by 0.2 percentage points to 3.5%, while global GDP growth will be reduced by 0.7 percentage points to 3.5%.
The energy market has seen some mixed performance since the start of the Ukrainian crisis. At first, it was only a geopolitical tension, but afterward, it became a military conflict.
Russian accounts for 10% of the world’s energy supplies; it accounts for 17% of natural gas exports and 12% of oil exports. The western sanctions against Russia have put the world in a vulnerable position due to the high economic power that Russia holds.
Inflation is moving fast and aggressively, taking an act of vengeance on the world economy. The market volatility is high; all major industries are down, such as the tech-heavy Nasdaq, the big 500, and the Dow Jones industrials. Investors are turning their trades to safe heavens, which include precious metals. In the metal market, we are seeing that the prices are at steady prices after a sharp increase last week.
Since last week,
- Gold is down by 32.15 to $1.921, or 90 per ounce.
- Silver is down by 0.59 to $24.79 per ounce.
- Platinum is down by 13 to $1.026 per ounce.
- Palladium is up by 120 to $2.494 per ounce
Except for palladium, all-metal prices are experiencing a cool and decrease in their prices. But the demand will skyrocket due to the existing risk that the market is having now. Last Wednesday, the Fed initiated its March hike by 25%, but recent comments are sending mixed messages among investors.
Traders are having their thoughts on the subject of the Fed policy maker’s capabilities in fighting inflation. In February, the U.S. inflation rate reached its all-time record since April 1982. Now add to the problem the surging prices of oil, gas, and natural materials.
GDP growth will decrease by 0.7 to 3.5% this year, and that won’t bring any relief to capitalists and traders. The U.S. economy will have to fight a dangerous combination of two challenges: inflation and supply shortages. These two challenges might force the monetary policymakers to tighten their policy and increase interest by 50% at the next meeting.
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