The global economy is expected to grow in 2023 less than expected, according to Fitch Ratings
International agency Fitch Ratings said on Tuesday it had once again revised down its forecast for global gross domestic product (GDP) for next year. He attributed the reduced outlook to rising inflation and a deteriorating outlook for China’s property market.
Fitch now expects global GDP growth of 1.4% in 2023, revised down from the 1.7% figure in its September Global Economic Outlook.
The ratings agency cut its forecast for U.S. growth next year to 0.2% from 0.5% as the pace of monetary policy tightening picks up. It also cut its China growth forecast to 4.1% from 4.5%, “as prospects for a recovery in housing construction fade.”
At the same time, Fitch improved its growth outlook for the euro zone in 2023 to 0.2%, from -0.1%, noting that the gas crisis in the region had eased somewhat, but said that stronger ECB rate hikes would weigh on demand.
The report says the risk of natural gas shortages in the EU and rationing this winter has receded due to the sharp increase in LNG imports and falling gas consumption. However, the crisis is far from over and high wholesale gas prices continue to weigh heavily on business costs and household budgets, Fitch said.
“Controlling inflation is proving more difficult than expected as price pressures widen and entrench. Central bankers need to take off their gloves. It will not be good for growth,” said Brian Coulton, chief economist at Fitch.
The report pointed out that recessions are expected in the euro area and the United Kingdom from the end of 2022, and in the United States during the second and third quarters of 2023. Unemployment is expected to exceed 5% in the United States. USA and UK next year.
“The impact of monetary tightening on the economy is already visible – particularly in housing markets – but broader effects on demand and labor markets will become more apparent over time,” Fitch warned.
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