Fitch Ratings has published the latest Global Economic Outlook Report. It asserts that the global economic recovery is still advancing, but it is hitting its limits
Fitch has published the September issue of its Global Economic Outlook Report. According to Fitch Ratings, the global economic recovery is still advancing, but it is hitting its limits.
The capacity of global suppliers has been stretched by an extraordinary surge in consumer demand for durable products. Supply limitations are slowing growth and causing inflationary pressures in the short run. According to the report, as demand growth slows and supply adjusts, these pressures should subside significantly in 2022.
Fitch now forecasts global GDP growth of 6.0 percent in 2021, down from 6.3 percent in June’s GEO. Price rises are reflecting a larger share of demand growth, and US inflation estimates have been pushed upwards again.
The housing downturn is impacting domestic demand; therefore Fitch has dropped China’s projection to 8.1 percent from 8.4 percent. Forecasts for several other Asian economies have been lowered due to an increase in coronavirus cases and new restrictions.
Fitch has raised the eurozone’s growth forecast for 2021 from 5.0 percent to 5.2 percent. Forecast upgrades have also been made for Poland, Turkey, Mexico, Russia, and South Africa. It increased its growth expectation for Turkey this year from 7.9 percent to 9.2 percent. Pointing out that the economic recovery in Turkey continues, the report noted that it is likely that the highest economic growth of the last 10 years will be experienced this year.
The impact of increased spikes in Covid-19 cases on economic activity in Europe and the United States is being limited by progress with vaccine implementation. However, where vaccination rates are low, virus dynamics have a greater impact on growth.
The policy debate is being influenced by inflationary pressures. The Fed is likely to begin tapering in November 2021, and we now forecast two Fed rises in 2023.
What is Fitch Ratings?
Fitch Ratings is one of the three leading providers of credit ratings, and the other two are Moody’s and Standard & Poor’s. Fitch publishes Global Economic Outlook Report four times a year to forecast the world’s GDP while evaluating each country’s growth levels.
Click to find the Global Economic Outlook Report.