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Key Points

Fitch Ratings has moderately upgraded its global growth outlook for 2025 to 2.4 percent. However, the agency warns that the US economy is showing clear signs of weakening with consumer spending already slowing. The report highlights that job growth has decelerated sharply partly due to tighter immigration policies. While China and eurozone forecasts were revised upward, global growth remains below trend with persistent inflation and trade tensions.

Key Points: Fitch Raises Global GDP Outlook as US Slowdown Becomes Evident

  • Fitch raises 2025 global GDP forecast to 2.4% from previous 2.2%
  • US economy shows clear slowdown with growth expected at just 1.6%
  • Consumer spending slows due to higher inflation reducing real wage growth
  • China's growth forecast revised upward to 4.7% from 4.2%
2 min read

Fitch Ratings increases global GDP growth outlook but US slowdown evident

Fitch Ratings revises 2025 global growth forecast to 2.4% while warning of significant US slowdown with consumer spending and job growth decelerating sharply.

"Global growth is now forecast to be 2.4 per cent in 2025, up 0.2pp since June... US Slowdown Now Evident in 'Hard' Data - Fitch Ratings"

New Delhi, September 10

Fitch Ratings has revised its global GDP growth forecast moderately upward to 2.4 per cent for 2025, an increase of 0.2 percentage points from the June outlook.

However, the agency warned that the world economy will still face a slowdown compared to 2.9 per cent growth recorded last year, with the United States showing clear signs of weakness.

It stated "Global growth is now forecast to be 2.4 per cent in 2025, up 0.2pp since June...... US Slowdown Now Evident in 'Hard' Data"

The report expects the US economy to grow at an annual average of just 1.6 per cent, well below trend, even though a widening fiscal deficit may provide some support in 2026.

The latest Global Economic Outlook report noted that global growth remains below trend and that the slowdown is significant. While better-than-expected data in the second quarter of 2025 has supported an upward revision.

The report highlighted that the US economy is now showing a slowdown in "hard" data. Consumer spending has already slowed in 2025, mainly due to higher inflation that has reduced real wage growth.

It mentioned that the job growth has also decelerated sharply, partly because of tighter immigration policies that have restricted labour force expansion.

The report said that the impact of the sharp rise in the US effective tariff rate (ETR) on inflation has been modest so far, but the pass-through to consumer prices is expected to increase later this year. Higher inflation is likely to add further pressure on household spending.

Highlighting the other major economies, the report stated that China's growth forecast has been revised upward to 4.7 per cent from 4.2 per cent, reflecting better performance than previously estimated.

Similarly, the eurozone growth forecast was raised to 1.1 per cent from 0.8 per cent, although Fitch cautioned that some of the recent positive surprises there were linked to businesses front-running purchases ahead of US tariff hikes.

Looking ahead, the report has also edged up its global growth forecast for 2026 by 0.1 percentage points to 2.3 per cent.

While this suggests a marginal improvement, the agency emphasized that the world economy will remain under pressure from trade tensions, high inflation, and slowing momentum in the US.

- ANI

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Reader Comments

P
Priya S
China's upward revision to 4.7% shows they're recovering better than expected. India needs to be cautious about trade dynamics in the region. The global economic rebalancing is happening faster than anticipated.
A
Aditya G
Higher inflation reducing real wage growth is exactly what's happening in India too. Common people are feeling the pinch across the world. Hope RBI manages our inflation better than the Fed did.
M
Michael C
The tightening immigration policies affecting US job growth is interesting. Many Indian IT professionals might reconsider US opportunities if this continues. Could be good for India's tech sector retention.
S
Shreya B
While the global outlook is improving slightly, I'm concerned about how trade tensions will affect Indian exports. Our manufacturing sector has been growing but external demand is crucial. Hope the government has contingency plans.
K
Karthik V
The report mentions businesses front-running purchases ahead of US tariff hikes. This temporary boost might not sustain. Indian policymakers should be careful not to read too much into short-term trends. Long-term structural reforms are what matter.

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