Fitch Ratings has revised upwards its growth forecast for the global economy to 2.6 per cent from the earlier projected 2.4 per cent in its March 2024 Global Economic Outlook publication.

In doing so, the London-based international credit ratings agency has joined the World Bank, which just last week revised upwards its global growth projection for 2024 to 2.6 per cent coming from the 2.4 per crnt projected in January this year.

Fitch’s revision on Monday (June 17) comes in the backdrop of renewed confidence in the European economy, an improvement in China’s export sector and domestic demand in emerging markets excluding China, showing stronger momentum. 

Brian Coulton, chief economist at Fitch Ratings, in his note, wrote, “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 emerging markets excluding China growth quite sharply, by 0.5pp to 3.7 per cent.” 

Growth to pick up in America and Europe

However, for 2025, the ratings agency expects world growth to contract to 2.4 per cent, as growth in the United States slows to a below-trend rate of 1.5 per cent and growth in the Eurozone picks up to 1.5 per cent. It has been projected that growth in China should fall to 4.5 per cent next year, as exports and government spending decelerate.

Regarding European recovery prospects, Fitch cites certain positive developments such 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 this will boost spending by households with robust financial buffers, while the drag from earlier European Central Bank (ECB) tightening diminishes.

Fitch expects the ECB to cut rates twice more this year, and the Federal Reserve to start cutting rates in September with another cut in December.