KUALA LUMPUR: Fitch Ratings has increased its global growth forecast for 2025 to 2.4% from 2.2%, citing stronger-than-expected second-quarter economic data.
The agency simultaneously warned that clear evidence of a United States economic slowdown is now mounting across multiple indicators.
Fitch noted that hard US economic data currently shows signs of weakening after previous strength.
Upside surprises in eurozone growth partly reflect companies rushing to beat anticipated US tariff implementations.
The agency’s September 2025 Global Economic Outlook indicates the new forecast remains significantly below the 2.9% expansion recorded throughout 2024.
China’s 2025 growth projection received an upward revision to 4.7% from the previous 4.2% estimate.
The eurozone’s forecast improved to 1.1% from 0.8% while the US outlook saw a minor adjustment to 1.6% from 1.5%.
Fitch Ratings Chief Economist Brian Coulton stated greater clarity on US tariff policy had reduced some market uncertainty.
Coulton emphasised that tariff increases remain huge and will ultimately reduce global growth despite improved policy transparency.
Evidence of a US slowdown is now appearing in hard data rather than just sentiment surveys according to his assessment.
Fitch indicated US national accounts data suggest the tariff shock has partially been absorbed through corporate profit pressures.
The pass-through to consumer prices is expected to accelerate later this year according to their analysis.
Rising inflation will likely curb real wage growth and further weigh on consumer spending throughout 2025.
Consumer spending has already slowed sharply this year alongside weakening job creation metrics.
Tighter immigration policies have reduced labour force growth, contributing to employment softening.
A widening fiscal deficit should support demand in 2026 despite current challenges.
Fitch expects US GDP growth to remain well below trend at 1.6% next year despite fiscal support.
Chinese exports have held up despite tariff shocks through a weaker effective exchange rate.
Falling export prices have redirected overseas sales and supported China’s trade performance.
Fiscal easing is propping up growth while private domestic demand shows signs of softening.
Deflation risks are deepening within China’s economic landscape according to the report.
European exports are unlikely to sustain their first-half pace through the remainder of 2025.
With consumer recovery fading, GDP is not expected to grow in the second half of this year.
German fiscal easing will provide more substantial support next year according to projections.
Fitch expects the US Federal Reserve to cut interest rates twice before year-end.
Three additional rate cuts are anticipated during 2026 according to their outlook.
The European Central Bank is not expected to loosen monetary policy further currently.
Long-term 30-year government bond yields in the US, UK, Germany and Japan remain under upward pressure.
Supply concerns possibly reflect underlying market anxieties about government debt levels. – Bernama