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Fitch released the June Global Economic Outlook report titled “Monetary Policy Enters a New Phase.”
The report said global growth forecasts were revised upward due to increased confidence in the possibility of recovery in Europe, a recovery in China’s export sector and stronger momentum in domestic demand in emerging markets outside China.
The report pointed out that the forecast for world economic growth in 2024 was raised from 2.4% to 2.6%, and the global economy was expected to grow by 2.4% in 2025 and 2026.
The US economy is gradually slowing down
The report said the U.S. economy was slowing, but it was gradual, and the forecast for U.S. economic growth this year remained unchanged at 2.1%. The U.S. economy is expected to grow by 1.5% in 2025 and 1.6% in 2026, according to the report.
The report said that it has raised its forecast for economic growth in the eurozone this year and raised its forecast for regional economic growth in 2024 from 0.6% to 0.8%. The report said that the eurozone economy is expected to grow by 1.5% in 2025 and 1.4% in 2026.
The report said that China’s economic growth forecast this year was raised from 4.5% to 4.8%, and China’s economy is expected to grow by 4.5% and 4.5% in 2025 and 2026.
The global monetary policy cycle has entered a new stage
The report noted that central banks are now shifting toward accommodative monetary policy, but said inflation remains surprisingly persistent and expected global interest rates to fall at a “slower” pace over the next 12-18 months.
The report said the global monetary policy cycle has entered a new phase in which interest rates will fall slowly but will remain at a level that restricts demand.
The European Central Bank (ECB) expects to cut interest rates twice more this year, while the Federal Reserve (Fed) is expected to start cutting rates in September and again in December, according to reports.
The report said central banks were cautious about easing monetary policy too quickly, especially given high inflation in the services sector.
Türkiye’s growth forecast for this year revised up by 3.5%
The report also included an assessment of the Turkish economy, saying that economic growth exceeded expectations in the first quarter of this year due to a recovery in exports, a sharp drop in imports and still-strong domestic demand.
The report said Turkey’s economic growth forecast for this year was raised from 2.8% to 3.5%. The country’s economy is expected to grow by 3% in 2025 and 3.2% in 2026.
The report said that tighter monetary policy, slower credit growth and expectations of tighter fiscal policy will help reduce inflation this year and will contribute to the significant base effect of the annual interest rate decline from July, as well as the year-end inflation expectations of 43% in 2024 and 23% in 2025 and 2026. It was recorded at 18.
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