International credit rating agency Fitch Ratings raised its forecast for global economic growth this year to 2.6 percent from 2.4 percent.
Fitch has published its June World Economic Outlook report titled “Monetary Policy Enters a New Phase.”
The report said global growth forecasts had been revised upwards due to growing confidence in a possible European economic recovery, a recovery in China’s export sector and stronger domestic demand momentum in emerging markets outside China.
The report noted that the global economic growth forecast for 2024 has been raised to 2.6 percent from 2.4 percent, and said the global economy is expected to grow by 2.4 percent in both 2025 and 2026.
The US economy is gradually slowing
The report said the U.S. economy had slowed, but only moderately, and left its growth forecast for the U.S. economy unchanged at 2.1% this year. The U.S. economy is expected to grow 1.5% in 2025 and 1.6% in 2026, the report said.
The report said growth forecasts for the euro zone economy this year had been revised upwards, with growth forecasts for 2024 raised to 0.8 percent from 0.6 percent. The report projected the euro zone economy to grow 1.5 percent in 2025 and 1.4 percent in 2026.
The report said it had raised its growth forecast for China’s economy this year to 4.8 percent from 4.5 percent, with the economy now expected to grow 4.5 percent in 2025 and 4.5 percent in 2026.
“The Fed is expected to start cutting rates in September.”
The report noted that central banks are currently steering monetary policy towards accommodative monetary policy, but said inflation remains “alarmingly” persistent and global interest rates are expected to fall at a “gradual” pace over the next 12 to 18 months.
The report said the global monetary policy cycle has entered a new phase, with interest rates falling slowly to demand-constraining levels.
The report said the European Central Bank is expected to cut interest rates two more times this year, while the U.S. Federal Reserve is expected to begin cutting rates in September and then cut again in December.
The report said the central bank would be cautious about easing monetary policy too quickly, especially given high levels of services inflation.
Türkiye’s inflation forecast at 43 percent in 2024
The report also included an assessment of the Turkish economy, saying it grew faster than expected in the first quarter of this year thanks to a recovery in exports, a sharp fall in imports and solid domestic demand.
The report said the growth forecast for the Turkish economy this year has been raised to 3.5 percent from 2.8 percent. It noted that economic growth is expected to reach 3 percent in 2025 and 3.2 percent in 2026.
The report said tighter monetary policy, slower credit growth and expected fiscal policy tightening will help keep inflation in check this year, with notable base effects contributing to a decline in annual rates from July and year-end inflation expectations of 43 percent in 2024 and 23 percent in 2025 and 2026. 18.
