Fitch raises 2023 global growth forecast

Fitch has published the March issue of its Global Economic Outlook Report.

Noting that Fitch raised its global growth forecast for the first time since the start of the Russia-Ukraine War, the report stated that the rise in question reflects the reopening of China after the Kovid-19 restrictions, the relief of the European gas crisis and the resilience of consumer demand in the USA. .

The report noted that the global economic growth forecast, which was 1.4 percent in the December report, rose to 2 percent, while the growth expectations for 2024 were 2.7 percent from 2.7 percent, with the lagged effect of the rapid increases in the interest rates of the US Federal Reserve (Fed) and the European Central Bank (ECB). It was stated that it decreased to .4.

In the report, it was pointed out that China’s lifting of the Kovid-19 restrictions at the beginning of the year was followed by rapid improvements in business surveys, and it was emphasized that contact-intensive consumer spending, which fell due to the restrictions in 2022, recovered rapidly, but the real estate sector continued to be weak and exports slowed down.

– Upward revision in growth forecasts for the US, Eurozone and China

China’s 2023 growth forecast is revised from 4.1 percent to 5.2 percent in December, the Eurozone’s from 0.2 percent to 0.8 percent, and the US from 0.2 percent to 1 percent. reportedly upgraded.

Fitch’s forecast for next year’s growth was 0.8 percent for the USA, 1.4 percent for the Eurozone and 4.8 percent for China.

Reminding that the European gas crisis has eased in recent months, it was noted in the report that this situation improved the growth expectations of the Euro Area and reduced basic inflation pressures.

Emphasizing that the US economy gained more momentum in the short term than expected with the strong employment and consumption growth at the beginning of the year, it was stated that the increase in household income continued and the savings buffers created during the pandemic would support expenditures for a while.

In the report, it was stated that a recession is foreseen in the US economy, albeit with a delay, and that the recession in question is expected to begin at the end of the third quarter.

– “Fed and ECB are concerned about inflation becoming permanent”

In the report, it was explained that the Fed and ECB began to be more concerned about inflation becoming permanent and reminded that the imbalances in the labor market, which is the source of wage pressures, continue.

It is estimated that the Fed interest rate will peak at 5.5 percent and the ECB’s refinancing rate at 4 percent in June.

In the report, it was emphasized that monetary tightening took longer than expected to slow down US demand, and it was noted that it was believed that interest rate hikes would eventually put pressure on activities.

Pointing out that the earthquake disaster in February is likely to be effective in Turkey’s short-term economic conditions, the report emphasized that growth is expected to accelerate in the third quarter with the restructuring programs.

In the report, it was stated that the Turkish economy is expected to grow by 2.5 percent this year and 3 percent in 2024. Fitch previously predicted that Turkey would grow by 2.9 percent in 2023 and 2024.

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