Credit rating agency Fitch Ratings has moderately increased its 2025 global economic growth forecast while flagging mounting evidence of a US economic slowdown that could dampen worldwide expansion.
Fitch revised its global GDP growth forecast upward to 2.4% for 2025, an increase of 0.2 percentage points from the June outlook, according to the agency’s September Global Economic Outlook released this week. The upgrade reflects stronger-than-expected second-quarter economic data from major economies.
However, the projection still represents a significant deceleration from 2.9% growth in 2024 and remains below long-term economic trends. The revision comes amid growing concerns about US economic momentum and the global impact of trade policy uncertainty.
Chief Economist Brian Coulton emphasized that improved tariff clarity does not diminish their economic impact. “Greater clarity about US tariff hikes does not alter the fact that they are huge and will reduce global growth,” he stated during the outlook presentation.
The agency upgraded China’s growth forecast to 4.7% from 4.2%, driven by resilient export performance despite ongoing trade tensions with the United States. China has managed to offset tariff impacts through currency depreciation and competitive pricing strategies, though domestic demand remains weak with persistent deflationary pressures.
European economic prospects also improved, with the eurozone growth projection raised to 1.1% from 0.8%. Fitch noted that eurozone growth partly reflects companies rushing to beat anticipated US tariff implementations, suggesting some acceleration may prove temporary.
The United States received a modest upgrade to 1.6% from 1.5%, though Fitch warned of accumulating slowdown indicators across multiple economic metrics. The agency cited weakening consumer spending, decelerating job growth, and constrained labor force expansion due to immigration policy changes as key concerns.
Fitch’s tariff analysis reveals nuanced regional impacts. The agency estimates an average US effective tariff rate of 16%, consistent with June assumptions. Mexico and Canada face relatively lower rates due to stronger compliance under the United States-Mexico-Canada Agreement, while Europe’s tariff burden decreased slightly. Asian economies excluding China, however, confront higher-than-expected trade barriers.
The inflation outlook presents additional challenges for US economic performance. While tariff-related price increases have remained modest initially, Fitch expects inflationary pressures to accelerate through 2025, potentially dampening household spending power despite fiscal support measures extending into 2026.
For China, export resilience has provided crucial economic support amid domestic challenges. The world’s second-largest economy continues managing trade tensions through strategic currency management and competitive pricing, though structural issues including weak private demand and entrenched deflation risks persist.
Global growth remains constrained by multiple headwinds beyond US-China trade tensions. Fitch identified slowing domestic demand across major economies, structural demographic challenges, and persistent inflationary pressures as factors limiting expansion potential.
The agency also marginally lifted its 2026 global growth forecast to 2.3%, suggesting gradual economic stabilization following current adjustment periods. However, this timeline assumes successful navigation of trade policy implementation and domestic economic rebalancing across major markets.
Regional performance variations reflect differing policy responses and economic structures. While some European economies benefit from front-loading investments ahead of potential tariff increases, this dynamic may reverse as uncertainty diminishes and trade costs materialize.
The forecast revision occurs as central banks worldwide navigate complex policy environments balancing growth support with inflation control. Fitch’s analysis suggests monetary policy effectiveness may face constraints from trade-related price pressures and structural economic shifts.
For investors and policymakers, the mixed outlook highlights ongoing uncertainty despite modest forecast improvements. The combination of tariff-induced costs, domestic demand softness, and structural economic transitions continues constraining global expansion below historical trends.
Fitch emphasized that while 2025 projections show marginal improvement, medium-term growth prospects remain subdued due to persistent trade tensions, inflationary dynamics, and structural economic challenges across major markets.
