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Informist, Friday, Mar. 13, 2026

 

NEW DELHI – Global economic growth is likely to moderate slightly in 2026 if the jump in crude oil prices due to the ongoing conflict in West Asia is relatively short-lived, Fitch Ratings said in a report Friday. The rating agency has raised its growth projection for 2026 for the global economy to 2.6% from 2.4?rlier as activity "held up well" despite a number of geopolitical and US tariff policy shocks. In 2025, the world economy grew 2.7%, close to its long-run average.

 

"The 0.2pp (20 bps) upward revision to our 2026 world GDP forecast is broad-based," Fitch Ratings said in its Global Economic Outlook for March. "On the assumption that the Iran war does not result in a larger or an enduring spike in energy prices that pushes our annual 2026 oil price forecast above USD 70/barrel, we expect broadly steady world GDP growth at 2.6% in 2026," Fitch Ratings said.

 

The global GDP growth of 2.7% last calendar year showed strong US consumer spending in late 2025 and resilient export growth in China. This was supported by a pick-up in trade globally, especially a 40% growth in sales of semiconductors, the rating agency said.

 

The impact of US tariff policies on global demand was offset by artificial intelligence-related investment spending, large fiscal borrowing in the US and China, and a boost to US consumption from stock markets.

 

The rating agency has raised the US GDP growth forecast for 2026 to 2.2% from 2.0% projected in January. It expects growth in the US to slow to 2.1% in 2027 from 2.2% in 2025. The US Federal Reserve will monitor the impact of the current geopolitical scenario, including the crude oil price shock, Fitch Ratings said.

 

The rating agency sees the Fed cutting interest rates twice in 2026, from the current 3.50-3.75%. The two rate cuts will bring the funds rate closer to the middle of the range of estimates of 'neutral', Fitch Ratings said.

 

In the case of China, the rating agency sees growth slowing down to 4.3% in 2026 and to 4.2% in 2027, from 5% in 2025. Fitch Ratings has attributed this slowdown to weakening consumer spending growth and export growth. It, however, anticipates a mild recovery in capital expenditure in the world's second-largest economy. "We have not made major changes to growth forecasts in the next two years," Fitch Ratings said, adding that it expects "investment to have bottomed out and to recover – albeit moderately – this year."

 

The Chinese authorities have announced conservative fiscal policy targets for this year. These new targets imply an overall "neutral (or slightly contractionary) fiscal stance" from a year-on-year growth perspective. Fitch's forecast for China's GDP growth in 2026 is marginally lower than the Chinese authorities' target, which has been revised to 4.5-5.0%, from 5.0% in recent years.  End

 

Reported by Shweta

Edited by Ashish Shirke

 

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