Fitch Ratings on Tuesday revised its growth forecast for the global economy to 2.6 per cent from the earlier projected 2.4 per cent in the March 2024 Global Economic Outlook.
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Fitch Ratings on Tuesday revised its growth forecast for the global economy to 2.6 per cent from the earlier projected 2.4 per cent in the March 2024 Global Economic Outlook.
It comes in the backdrop of a renewed confidence in the European economy, an improvement in China’s export sector and domestic demand in emerging markets (EMs), excluding China, showing stronger momentum.
Fitch Ratings said that the US is slowing but only gradually and their 2024 growth forecast for one of the world’s largest economies remains unchanged at 2.1 per cent.
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“We have raised our forecast for world growth in 2024 to 2.6 per cent from 2.4 per cent in the March 2024 Global Economic Outlook. We have revised up Eurozone growth by 0.2 percentage points (pp) to 0.8 per cent ; China’s growth to 4.8 per cent from 4.5 per cent; and EM excluding China growth quite sharply, by 0.5 pp to 3.7 per cent,” Brian Coulton, chief economist said.
For 2025, Fitch Ratings expects world growth to edge down to 2.4 per cent as US growth slows to a below-trend rate of 1.5 per cent and growth in the Eurozone picks up to 1.5 per cent.
The agency also expects growth in China to fall to 4.5 per cent next year, as exports and government spending decelerate.
Further on the global monetary policy cycle, Fitch Ratings said, it is entering a new phase, in which rates are likely to fall slowly but to levels that will still be restricting demand.
Fitch expects the European Central Bank (ECB) to cut rates twice more this year, and the US Fed to start cutting rates in September with another cut in December.
It said that the European recovery prospects are on a firmer footing as the terms-of-trade and energy shock reverses, energy-intensive industries start to pick up in Germany and real wages rebound.
Stronger real incomes, the rating agency believes, will boost spending by households with robust financial buffers while the drag from earlier ECB tightening diminishes.
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