Fitch raises global economic growth forecast while pointing to US slowdown

• With weakening US job growth, Fitch expects 25 basis point rate cuts at Fed's September, December meetings, with 3 more in 2026

ISTANBUL

International credit rating agency Fitch Ratings raised the global gross domestic product (GDP) growth forecast from its previous forecast on Tuesday while pointing to a slowdown in the US economy and job market.

"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 said in a statement.

However, the agency said it expects global economic growth to "significantly" slow this year compared to last year's figures.

The global economic growth rate is expected to slow to 2.4% this year from 2.9% last year, while it is expected to ease further to 2.3% next year. The report also noted that the global economy is expected to grow by 2.6% in 2027.

"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 said.

The agency said there has been a reduction in uncertainty over US tariff policy after a series of announcements.

However, “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.

Fitch noted that the hike in inflation stemming from the tariff increases has been "modest," adding they expect the rise in inflation to accelerate later this year.

"Higher inflation will dampen real wage growth and weigh on US consumer spending, which has already slowed notably in 2025. A widening fiscal deficit should support demand in 2026, but Fitch expects the US annual average GDP growth rate to remain well below trend at 1.6% next year," it said.

Stating that US job growth has decelerated "markedly," Fitch said the weakening in the US job market should persuade the Federal Reserve to cut rates more quickly than previously anticipated.

Fitch now expects a 25 basis point rate cut at the Fed's September and December meetings, with three more rate cuts next year.