Fitch Revises Global GDP Growth Forecast

(MENAFN) Fitch Ratings, the global credit rating agency, revised its forecast for global GDP growth upwards on Tuesday, citing a deceleration in the US economy and job market. Despite the upgrade, the agency warned of a significant slowdown in economic growth globally this year.

"There is now evidence of an underlying US slowdown in ‘hard’ economic data and positive surprises on eurozone growth have partly reflected US tariff front-running," Fitch stated in its report.

While global growth is expected to be stronger than previously predicted, the agency highlighted that it would still significantly slow compared to last year. Global GDP growth is now projected at 2.4% for 2025, down from 2.9% in 2024, with a further deceleration to 2.3% forecasted for 2026. The global economy is then expected to grow by 2.6% in 2027.

The credit agency adjusted specific regional forecasts, noting improvements in several key areas. "China’s forecast has been raised to 4.7% from 4.2%, the eurozone’s to 1.1% from 0.8%, and the US’s to 1.6% from 1.5%," it added.

Regarding US tariffs, Fitch indicated that the reduction in uncertainty surrounding US tariff policy has not lessened its negative impact on global growth. "Greater clarity about US tariff hikes does not alter the fact that they are huge and will reduce global growth. And evidence of a slowdown in the US is now appearing in the hard data; it’s no longer just in the sentiment surveys," said Brian Coulton, Chief Economist at Fitch.

The agency further noted that while inflation resulting from tariff increases has been "modest," it anticipates a steeper rise later this year. "Higher inflation will dampen real wage growth and weigh on US consumer spending, which has already slowed notably in 2025," the report emphasized. The widening fiscal deficit in the US is expected to support demand into 2026, but Fitch forecasts the country's GDP growth rate will remain well below the trend, at 1.6% next year.

On the job market front, Fitch observed that US job growth has decelerated "markedly," suggesting a more rapid response from the Federal Reserve. The agency now predicts a 25 basis point rate cut at the Fed's September and December meetings, with three additional cuts anticipated in 2026.

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