Fitch has released its March Global Economic Outlook report, noting that for the first time since the start of the Russia-Ukraine conflict, it has raised its global growth forecast. The increase reflects China’s reopening following COVID-19 restrictions, the easing of Europe’s natural gas crisis, and the resilience of US consumer demand. The report states that the global economic growth forecast has risen from 1.4% in December to 2%, but growth expectations for 2024 have fallen from 2.7% to 2.4% due to the delayed impact of the rapid increase in interest rates by the US Federal Reserve and the European Central Bank. The report highlights that China has quickly recovered from reduced consumer spending due to pandemic-related restrictions in 2022, but the real estate sector continues to be weak, and exports have slowed.
Fitch has revised its growth forecasts upward for China (from 4.1% to 5.2% in 2023), the Eurozone (from 0.2% to 0.8%), and the US (from 0.2% to 1%). Fitch’s growth forecast for 2024 is 0.8% for the US, 1.4% for the Eurozone, and 4.8% for China. The report notes that the easing of the European gas crisis in recent months has improved growth expectations for the Eurozone and reduced core inflation pressures.
The report states that the US economy has gained more momentum than expected in the short term, thanks to strong employment and consumption growth at the start of the year, and household income growth continues, with pandemic-related savings supporting spending for a while. The report predicts a recession in the US economy, but it is expected to begin in the latter part of the third quarter.
The report notes that the US Federal Reserve and the European Central Bank have become increasingly concerned about inflation becoming permanent and that labor market imbalances, the source of wage pressure, continue. The report predicts that the Fed’s interest rate will peak at 5.5%, and the ECB’s refinancing rate will peak at 4% in June. The report emphasizes that the monetary tightening that slows US demand is expected to last longer than anticipated, and interest rate hikes will eventually create pressure on activities.
Growth forecast for Turkish economy
A report indicated that the earthquake disaster in February is likely to have an impact on Turkey’s short-term economic conditions, and emphasized that growth is expected to accelerate in the third quarter with reconstruction programs.
The report stated that the Turkish economy is expected to grow by 2.5 percent this year and 3 percent in 2024. Fitch had previously predicted that Turkey would achieve growth of 2.9 percent in 2023 and 2024.