Fitch Ratings revises up 2023 world growth forecast to 2.9% from 2.5%

It also raised growth in emerging markets excluding China by 0.2 pp to 3.6 per cent. Eurozone growth is forecast at 0.5 per cent, little changed from the previous forecast.

World growth has held up well in 2023, driven by a normalisation of consumption in China and a pick-up in US growth, which have outweighed a sharp slowdown in Europe in the wake of last year’s regional energy shock, Fitch Ratings said.

But with the full impact of recent monetary tightening still to be felt, China’s ongoing property slump and the eurozone economy stagnating, world growth is expected to fall sharply to 2.1 per cent next year, the rating agency’s chief economist Brian Coulton observed in a note.

Fitch has revised up its forecast for global growth in 2024 by 0.2 pp, with a 0.9-pp increase in the United States to 1.2 per cent (with recession now avoided) outweighing a 0.4-pp cut to eurozone growth to 0.7 per cent.

Europe’s economy has hardly grown this year and mild technical recessions are currently unfolding in the eurozone and the United Kingdom. The terms-of-trade shock has eased, but falling world trade is now hitting eurozone exports while credit tightening is weighing on investment, as bank lending to companies declines.

Rising real wages should boost consumption in Europe next year but recovery will be shallow, Fitch noted.

This year’s re-opening boost in China will not be repeated and growth is forecast to slow to 4.6 per cent in 2024.

Core inflation has fallen slightly faster than anticipated, particularly in the eurozone. Core goods prices have stabilised globally as supply-chain pressures have eased.

Central banks are nervous about making a premature declaration of victory in the fight against inflation and will keep rates ‘restrictive’ for some time, the rating agency added.

Fibre2Fashion News Desk (DS)