Fitch Ratings, an international credit rating agency, expects the global economy to slow down in the next two years.
Analysts note that global GDP will increase to 2.8 percent this year.
The favorable outlook for the global economy in 2019 reflects improved GDP forecasts for the United States, China, and the eurozone amid worsening economic expectations for Brazil, Mexico, Russia, South Korea, South Africa, Canada, and Australia.
Global economic growth in 2020 was revised down to 2.7 percent from a previously estimated 2.8 percents. It was caused by cuts of economic growth forecasts for China (to 6.0 percent from 6.1 percent), the US (to 1.8 percent from 1.9 percent), and Brazil (to 2.1 percent from 2.7 percent).
Experts at Fitch Ratings believe that the trade dispute between the US and China affects investment prospects and increases the risks for the global economy. The agency also downgraded the global economy’s growth outlook for the next year. If the US imposes 25-percent tariffs on the remaining $300 billion of imports from China, global GDP will reduce by 0.4 percent in 2020.
Fitch expects US GDP to rise by 2.4 percent this year and 1.8 percent next year. In 2021, the indicator may reach 1.7 percent. For the eurozone, growth forecasts are 1.2 percent, 1.3 percent, and 1.2 percent, respectively, for China - 6.2 percent, 6 percent, and 5.8 percent, for Japan - 0.8 percent, 0.5 percent, and 0.6 percent, and for the UK - 1.4 percent, 1.5 percent, and 1.8 percent.
Analysts of the agency assume that the economies of developed countries will go up by 1.8 percent in 2019 and by 1.5 percent in the next two years. For emerging markets (EM), economic growth is estimated at 4.5 percent for 2019, 4.8 percent for 2020, and 4.9 percent for 2021.
According to Fitch experts, deteriorating prospects for business investment have culminated in bearish forecasts for the global economy. Analysts say that more accommodative global monetary conditions may improve the situation. After raising interest rates four times in 2018, the Federal Reserve is expected to leave them on hold in 2019. Moreover, the European Central Bank is ready to restart asset purchases this year.
Last data signal an upcoming slowdown in business investment in the US. Moreover, manufacturing investment in China has reduced sharply. Fitch predicts that the benchmark interest rate in the US will set at 2.5 percent at the end of 2019, 2.75 percent at the end of 2020, and 3 percent at the end of 2021. The interest rate in the eurozone is forecasted to stay at 0 percent, and Japan’s interest rate is expected to remain at -0,1 percent. In the UK, the rate will be held at 0.75 percent at least until the end of this year, while an increase to 1 percent should be expected by the end of 2020 and to 1.25 percent by the end of 2021.
