Fitch cuts global growth forecasts

GMT 06:10 2014 Thursday ,02 October

Arab Today, arab today Fitch cuts global growth forecasts

Credit ratings agency Fitch
Istanbul - Anadolu

Credit ratings agency Fitch has lowered its global growth forecast for 2015 and 2016 while estimating the US Federal Reserve will increase interest rates to 5 percent by the end of 2016.
In its Global Growth Outlook report released in its website on Tuesday, Fitch cut its growth outlook for the coming two years by 0.1 percentage points, compared to its previous report's figures released in June.
Fitch's global growth forecast for 2015, which had been 3.1 percent, was cut to 3 percent and for 2016 it was downgraded from 3.2 percent to 3.1 percent.
Fitch estimated that contributions from developed economies to global growth would rise, but growth in emerging economies would be suppressed with anticipated interest rate hikes from US Federal Reserve and geopolitical risks.
Fitch said in the report: "Fitch expects the Fed and Bank of England to start gradually tightening policy over the next few quarters.
"Meanwhile, the ECB announced further easing measures at its September meeting and the Bank of Japan is continuing with its qualitative and quantitative easing strategy."
- Weak growth
"In this scenario, the Federal Funds rate increases to 5 percent and the 10-year US yield reaches 6 percent by end-2016," it said.
An average growth of 4.7 percent recorded in emerging economies in 2013 was predicted to fall to 4 percent in 2014.
Among large-scale economies, Fitch estimated the US economy would grow by 2.4 percent for this year while seeing 3.1 percent and 3 percent growth performances for 2015 and 2016 respectively.
However, the EU economy is expected to show relatively weak growth performance in the forthcoming period.
Fitch forecast a 0.9 percent growth in 2014 to be followed by 1.3 percent in 2015 and a 1.5 percent in 2016.
China, the second-largest economy in the world, is forecast to grow by 7.2 percent this year and 6.8 percent  in 2015.


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