Fitch Ratings issued an updated report on global economic outlookand in his analysis he highlights the possibility of the US entering into a “slight recession” during the second half of 2024. This forecast is based on two factors crucial: the deep crisis of the real estate market in China and the most restrictive monetary policies in that country and Europe.
In an unexpected turn, Fitch Ratings It also revised upward its expectations for global economic growth for the year 2023. The agency revised its forecast by one tenth, placing it at 2.5%. This increase reflects the remarkable economic resistance demonstrated by USA, Japan and emerging marketsexcluding China.
In detail, Fitch increased the US growth projection by eight tenths, reaching a solid 2%and that of Japan in seven tenths, reaching 2%. Furthermore, the growth of emerging markets, excluding China, rose five tenths, placing it at a promising 3.4%. These improvements offset downward adjustments in growth estimates for China and the euro zone.
The document reveals that corporate profit expectations for 2024 will also worsen. However, it seems that the US maintains some stability in these expectations, surpassing Europe and China.
Fitch: what it said about global growth
On the other hand, Fitch reduced its projections global growth by 2024. A general slowdown in the world economy is expected, with downward revisions in all areas. The US growth forecast was cut by two tenths, reaching 0.3%. The Euro zone also experienced a decrease of three tenths, with a growth projection of 1.1%. China and emerging markets, excluding the Asian giant, have seen a decrease in two tenths in their growth expectations, remaining at 4.6% and 3%, respectively.
The plummeting real estate market in China and stricter monetary policies in the US and Europe are presented as the main obstacles to global growth in 2024. Fitch emphasizes that the stabilization of the Chinese real estate market has not yet materialized, which is affecting export demand.
Regarding the US, although it has experienced solid growth in consumptiona slowdown in labor demand and a weakening in business investment prospects are expected due to tighter credit conditions.
In the case of the Euro zone, the economic recovery has stalled due to the energy crisis and faces new challenges from the slowdown in global trade and China. Furthermore, the tightening of the monetary policy of the European Central Bank is affecting credit growth in the region.
Despite the downward revisions for 2024, Fitch Ratings highlights that it is expected faster than expected growth by 2023, indicating some economic resilience in the coming years. However, it is essential to remain vigilant about current challenges that could influence the global economic landscape.
Source: Ambito
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