Economic Growth Forecasts Revised Upwards by Fitch Ratings
Confidence in European Economy on the Rise
Fitch Ratings has revised its economic growth forecasts upwards, citing a resurgence of confidence in the European economy, an improvement in China's export sector, and a stronger dynamic of domestic demand in emerging markets outside of China.
US Growth to Decelerate, Eurozone to See Uptick
The ratings agency expects the United States to slow down, with growth forecasts for 2024 remaining unchanged at 2.1%. In contrast, the eurozone's growth forecast has been revised upwards by 20 basis points to 0.8%. China's growth forecast has also received a 30-basis-point boost, reaching 4.8%. Emerging markets outside of China are expected to see growth rise from 3.2% in March 2024 estimates to 3.7% in June estimates.
Global Growth to Slow in 2025
For 2025, Fitch Ratings predicts global growth will slow to 2.4%, driven by a deceleration in US growth to below-trend rates of 1.5%, and a rebound in eurozone growth to 1.5%. The agency also expects Chinese growth to fall to 4.5% next year, due to a slowdown in exports and public spending.
Monetary Policy Cycle Enters New Phase
According to Fitch Ratings, the global monetary policy cycle is entering a new phase, characterized by a slow decline in interest rates, which will continue to restrict demand. The agency predicts the European Central Bank will cut rates twice this year, while the US Federal Reserve will start reducing rates in September, followed by another cut in December.
European Recovery Gains Momentum
The prospects for a European recovery are looking more solid, as trade terms and energy shocks reverse, energy-intensive industries begin to restart in Germany, and real wages recover. The increase in real incomes will stimulate household spending among those with significant financial reserves, while the slowdown caused by the European Central Bank's previous tightening will ease.