Fitch Ratings revises global, U.S. growth forecasts amid expected slowdown

(MENAFN) Fitch Ratings has revised its global growth forecast for 2024 to 2.7 percent, an increase of 0.1 percentage points from its previous prediction in June. The updated forecast reflects a more optimistic outlook, particularly for the United States, where Fitch has raised its growth projection to 2.5 percent from 2.1 percent. This adjustment underscores a more favorable economic scenario than previously anticipated, driven by various factors including expectations around monetary policy and economic activity.

The agency's latest report on global economic prospects highlights that the Federal Reserve's forthcoming cycle of monetary policy easing will be more gradual compared to past interest rate reductions. This moderation is attributed to persistently high inflation in the services sector, which continues to exert upward pressure on prices. Fitch anticipates that the Federal Reserve's cautious approach will lead to a more tempered impact on economic growth, reflecting the current inflationary environment.

Looking ahead, Fitch expects global GDP growth to decelerate to 2.5 percent in 2025, with a notable slowdown in U.S. growth to 1.6 percent next year. This anticipated decline is attributed to weak consumption and minimal impact from interest rate cuts. The projections suggest that while monetary policy adjustments may provide some relief, their effects on stimulating growth will be limited, particularly as economic conditions evolve. 

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