It has revised up the US growth forecast for this year to 2.5 per cent from 2.1 per cent in June, and forecasts for the United Kingdom, Brazil and Russia have also been revised upwards.

“We expect global GDP to slow to 2.5 per cent in 2025 as US growth falls to 1.6 per cent on a fading fiscal impulse and gradual slowdown in consumption, as household income decelerates. A Federal Reserve easing cycle is finally about to begin but rates will remain restrictive next year and the impact of rate cuts on growth will be small,” Fitch said in a release.

It also expects China’s growth to fall next year to 4.5 per cent from 4.8 per cent this year as rapid export growth eases.

“But eurozone growth should recover to 1.5 per cent in 2025 from 0.8 per cent (unrevised) this year. This mainly reflects the impact of a recovery in real wages on consumption, which has been weak since 2022,” it noted.

Fitch said annual inflation in Turkiye has slowed down significantly in August, while it is expected to fall to 43 per cent by the end of the year. It expects the Turkish economy to expand by 3.5 per cent this year, 2.8 per cent next year and 3.7 per cent in 2026.

The US Federal Reserve's (Fed) monetary policy easing cycle that is about to begin will be ‘mild and slow’ compared with the previous rate cutting cycles of the central bank, the rating agency said, adding that the recent macroeconomic data have boosted the Fed’s confidence that disinflation is on track.

The agency expects 25 basis points of rate cuts at the Fed's September and December meetings, and further cuts of 125 basis points in 2025 and 75 basis points in 2026.

Fibre2Fashion News Desk (DS)