Global economic growth projected to end 2025 at 2.4% – Fitch Ratings
Fitch Ratings has revised its global growth forecasts for 2025, projecting a 2.4% growth by year-end, representing a slight 0.2% uptick from June but still a notable decline from last year’s 2.9%.
This, according to Fitch, reflects a modest increase since its June Global Economic Outlook (GEO), pointing to better-than-anticipated economic data from the second quarter of 2025.
However, the firm has also detected signs of a slowdown in the U.S. economy based on concrete economic indicators, while unexpected growth in the eurozone has been partially attributed to U.S. tariff front-running.
Despite these adjustments, the credit rating agency forecasts a significant deceleration in global Gross Domestic Product (GDP) this year.
A breakdown of the figures indicates that China’s growth forecast has been increased to 4.7% from 4.2%, while the eurozone’s projection has risen to 1.1% from 0.8%. The United States’ growth estimate has also seen a minor increase, now projected at 1.6%, up from 1.5%.
For 2026, world growth is expected to be slightly higher at 2.3%.
The uncertainty surrounding U.S. tariff policies has died down following a series of recent announcements. Fitch indicates that the average effective tariff rate (ETR) in the U.S. stands at 16%, closely aligning with the rate estimated in June.
While Mexico and Canada benefit from lower ETRs due to improved compliance with the USMCA, Europe’s ETR has decreased slightly as well. However, this has been counterbalanced by higher-than-expected rates for other Asian countries, excluding China.
“Greater clarity about US tariff hikes does not alter the fact that they are huge and will reduce global growth. And evidence of a slowdown in the US is now appearing in the hard data; it’s no longer just in the sentiment surveys,” Chief Economist at Fitch, Brian Coulton said.
The impact of this significant increase in ETR on U.S. consumer price index (CPI) inflation has been relatively modest so far. There is some indication in U.S. national accounts that the shock from tariffs has been partially absorbed by downward pressure on corporate profits, but Fitch projects that the pass-through effect will accelerate later this year.
The firm also notes that rising inflation is expected to slow real wage growth and negatively affect consumer spending in the U.S., which has already shown signs of slowing down significantly in 2025. Job creation has also slowed considerably, partly due to restrictions on immigration affecting labor force expansion. Although an expanding fiscal deficit may bolster demand in 2026, Fitch predicts that the annual average GDP growth rate for the U.S. will remain below trend at 1.6% next year.
On the other hand, Fitch Ratings indicated that China’s export sector has demonstrated resilience amid the U.S. tariff challenges, aided by a depreciating nominal effective exchange rate and declining export prices that have redirected foreign sales.
While fiscal easing continues to support growth, Fitch says there are signs that private domestic demand is weakening and deflationary pressures are becoming more firmly grounded.
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