Fitch Ratings Ltd yesterday revised downward its global economic growth forecast to 2.6 percent for this year, from the 3.1 percent growth it estimated in July, citing a weaker-than-expected growth in major advanced economies during the second quarter.
In the ratings agency’s latest quarterly report, Global Economic Outlook (GEO), Fitch said growth in major advanced economies stalled in the second quarter “at rates not seen since 2009.”
Fitch’s global forecast came after the IMF last month cut its growth forecasts for the global economy to 4 percent for this year and next year, from 4.3 and 4.5 percent respectively.
The IMF said in its biannual World Economic Outlook report that Western economies could fall back into recession, a scenario that would have serious knock-on effects for the rest of the world.
Given the increasing downside risks to the global economy, Fitch said the latest GEO report had further explored the potential impact of a hypothetical “double-dip” recession in the US on the global economic recovery.
“Fitch does not project a ‘double-dip’ in its baseline global economic projections. However, the likelihood of a recession has increased, as intensified financial market volatility could further amplify risk aversion behavior and lead to tighter credit conditions,” Maria Malas-Mroueh, director of Fitch’s sovereign team, said in a statement.
The agency said growth in emerging markets would not “decouple from major advanced economies” and revised downward its GDP forecasts for Brazil, Russia, India and China this year and next year, even though these emerging markets still have more robust growth prospects.
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