Fitch forecasts steady global growth despite current oil price shock

Fitch Ratings' latest outlook projects steady global economic growth if the current oil price shock is brief. World growth is forecast to slightly slow to 2.6% in 2026, a revision up from a previous estimate of 2.4%, per the latest GEO report.

Fitch: Steady Global Growth Hinges on Oil Prices

Global economic growth should be steady this year provided the current oil price shock is not prolonged, Fitch Ratings said in its latest March 2026 Global Economic Outlook (GEO).

The world economy has held up well despite a succession of geopolitical and US policy shocks. World growth was 2.7 per cent last year, close to its long-run average. Assuming that the recent jump in oil prices is relatively short-lived, Fitch anticipates only a slight slowdown in 2026 to 2.6 per cent, revised from 2.4 per cent in December's outlook.

Surging AI-related investment, large fiscal deficits in the US and China, and a boost to US consumption from equity market gains helped offset the impact of higher US tariffs last year, Fitch said.

US Outlook Upgraded; China and Eurozone Projections

"We expect US consumption to slow in 2026 as labour market weakness weighs on household income, but the US fiscal deficit is widening again. We forecast US 2026 GDP growth at 2.2 per cent, revised up from 2 per cent in our January forecast update, and unchanged from last year," the rating agency said.

Fitch projects eurozone growth at 1.3 per cent, unchanged from December, and slightly below last year. China is forecast to slow to 4.3 per cent from 5 per cent in 2025 as consumer spending growth is weakening and export growth is expected to cool.

Oil Price Forecast and Potential Risks

The rating agency has raised its 2026 annual average crude oil price forecast to USD 70 a barrel from USD 63 (Brent). "This assumes that the Strait of Hormuz remains effectively closed for about a month, but oil prices then fall to the mid-USD 60s by 2H26. This revision has not had a major impact on our base-case economic forecasts" the rating agency said.

Adverse Scenario: A USD 100 per Barrel Shock

But an adverse scenario, in which oil prices rise to USD 100 per barrel and remain there, would be a significant global supply shock, reducing world GDP by 0.4 percentage points after four quarters and adding 1.2-1.5 percentage points to inflation in Europe and the US, Fitch has estimated. (ANI)

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