Daily Management Review

Fitch cuts global GDP growth forecast again


International rating agency Fitch Ratings downgraded its global GDP growth forecast for the year to 5.7% from the 6% forecast in September, the agency said in its December global economic outlook.


Fitch Ratings: Credit Ratings & Analysis For Financial Marketshttps://www."We have lowered the global GDP growth forecast (for 2021) by 0.3 percentage points from the September global economic outlook (GEO) to 5.7%," the report said. The growth rate remains the fastest since 1973, a far cry from stagflation, Fitch commented. The agency expects GDP growth to slow to 4.2% next year instead of 4.4%, and to 3% in 2023.

The forecast for US economic growth for the current year has been worsened to 5.7% from 6.2% in September, the country's GDP growth will be 3.7% in 2022 instead of 3.9%, and 1.9% in 2023, the report said. Fitch forecasts annual inflation in the US to be 6.4% in 2021, 2.8% in 2022 and 2.4% in 2023. Analysts at the agency say they expect the US Federal Reserve (Fed) to raise rates in September 2022, some nine months ahead of September expectations.

Expectations for eurozone GDP growth have been worsened to 5% from 5.2% for 2021, with 4.5% growth expected in 2022 and 2.2% in 2023. Germany's growth forecast for the current year was worsened to 2.8% from 3.6%, next year's GDP growth of 4.4%, in 2023 expected to be 2%.

Fitch expects Japan's GDP growth to be 1.9% instead of 2.5% this year, then accelerating to 3.4% in 2022 and slowing to 1% in 2023. China's GDP will grow 8% in 2021 instead of 8.1%, 4.8% in 2022 instead of 5.2%, and 5.3% in 2023. GDP growth for emerging economies is estimated at 7% this year, then growth will slow to 4.7% and 4.6% in 2022-2023 respectively.

"Fitch Ratings has lowered its growth forecasts in 2021 for the US, Germany and Japan, reflecting recent supply chain-related disruptions in manufacturing," commented the agency analysts. Fitch also attributes the deterioration of its 2022 outlook in part to supply chain disruptions, which will continue into 2022.

source: fitchratings.com