According to the ratings agency’s Global Economic Outlook, the world economy will expand by an “insipid and fragile” 2% in 2012 and by 2.4% in 2013. This is a downgrade of ten and 20 basis points respectively since the group’s last forecast.
The eurozone recently entered into technical recession, which Fitch expects to deepen over coming quarters, while Japan’s growth is also likely to remain weak. Emerging markets, meanwhile, face “growing challenges” with Brazil and India going through soft patches that will affect the global growth rate.
Fitch maintained its US growth forecast at 2.3% for 2013, noting that the economy accelerated in the third quarter of 2012 but adding that Hurricane Sandy and the looming fiscal cliff complicates the near-term outlook.
Gergely Kiss, director in Fitch’s sovereign team, said: "Global growth outturns are continuing to undershoot expectations and risk remain skewed to the downside.
“Although forceful ECB intervention has eased tail risks in the eurozone, it has so far failed to arrest economic stagnation, the looming ‘fiscal cliff’ could tip the US economy into recession, and China faces a challenging transition towards a more balanced growth model.”