©Reuters. FILE PHOTO: Skyscrapers of the Moscow International Business Centre, also known as ‘Moskva-City’, are seen from the Ostankino Tower on a frosty winter day in Moscow, Russia January 8, 2017. REUTERS/Maxim Shemetov
(Reuters) – S&P Global (NYSE:) cut its 2022 GDP growth estimate for Russia by more than 11 percentage points to a decline of 8.5%, while its forecasts for Poland and Turkey fell by more than 1 percentage point due to the impact corrected below of the war in Ukraine.
Regarding its economic outlook for emerging markets for the next quarter, S&P Global said its baseline premise is that “the conflict will have the greatest impact on commodity markets, supply chains, and investor and consumer confidence in the first and second quarters of 2022. “
The impact would wear off, but would continue through the rest of the year and beyond, it said.
S&P said emerging market countries were most exposed through trade, financing and confidence channels, while many energy importers were also impacted by the price hike.
S&P cut growth estimates for Poland by 1.4 percentage points to 3.6%, for Turkey by 1.3 percentage points to 2.4% and for South Africa by 0.5 percentage points to 1.9%. Russia’s was reduced to an 8.5% contraction after previously expecting a 2.7% expansion.
“A combination of financial, trade and technology sanctions has never been imposed on a large, globally integrated economy, so it’s difficult for us to predict the magnitude of the impact,” S&P said in a report.
Regarding Poland, S&P said that even if exports to Russia had shrunk to 3% of the total, down from more than 5% before Russia annexed Crimea in 2014, manufacturing would suffer from supply disruptions and weaker demand from Europe .
It raised the inflation forecast for Poland from the previous 5.4% to 8.9% in 2022 and now envisages that the reference rate will reach 5% by the end of this year and 5.5% by the end of 2023.
Turkey’s downgrade comes amid gloomy trade prospects and already falling retail sales.
“Rising food and energy prices and the weaker currency will worsen an already bleak inflation outlook,” S&P said after estimating inflation at 55% this year.
Rising inflation risks prompted S&P to raise its forecast for the South African Reserve Bank’s interest rate to 5% by the end of the year.
“Trading conditions have improved thanks to higher metal prices, although rising oil prices have erased some of the gains, and we expect this improvement to support the South African rand in an environment of Fed tightening and market volatility,” S&P said.
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