Rating agency Moody’s revealed in a report published February 18 that downside risks on global growth have increased as tighter market conditions and risk aversion add to the fall in oil price and slowdown of China’s economy. “Risks on global growth have increased since our last forecast (November), the fall in oil prices and concerns over weakening Chinese economy (…) added to a surge in risk tolerance and tighter conditions on financial markets,” the agency said in its update of forecast for the growth of G20 nations.

“If it continues, higher financing costs (…) could have a greater impact on investment on investments and economic growth than what we currently forecast,” the release added.

However, Moody's maintained its growth forecast for the 20 most developed economies of the world at 2.6% in 2016, stable compared to last year. G20 countries should record a slight growth to 2.9% in 2017.

The American agency projects the prolonging of China’s economic slowdown. GDP growth in the Asian nation should range between 6.1% and 6.3% this year, against 6.9% in 2015. It also scaled down forecasts for Brazil and Russia respectively by 3% and 2.5%, highlighting that geo-political tensions could boost the risk aversion of these emerging economies.

Moody’s expects economic advantages related to rising price of oil to be limited, as the situation would not allow for an environment favoring long-term investment in the oil sector.