Trade War Turmoil: Fitch Slashes Global Growth Forecast Amid Rising Tariffs

Fitch Ratings has reduced its global growth forecasts due to heightened trade tensions, predicting a 0.4pp decline in 2025. The US may see minimal growth at 1.2%, slowing to 0.4% by year-end. With escalating tariffs impacting economies, the forecast hints at economic instability in major regions.

Fitch Ratings has drastically cut its global economic growth projections, citing the intensifying global trade war. The ratings agency's latest Global Economic Outlook report forecasts a reduction in world growth by 0.4 percentage points for 2025, alongside a decrease in growth for China and the US by 0.5 percentage points each.

According to the report, US growth is expected to remain positive at 1.2% for the year but will slow significantly, reaching just 0.4% by the fourth quarter of 2025. Meanwhile, China's economic growth is projected to fall below 4%, and the Eurozone's growth is expected to remain under 1%, highlighting widespread economic challenges.

The report also notes that the US's introduction of a 'Liberation Day' tariff hike far exceeded expectations, contributing to numerous retaliatory measures between China and the US, driving bilateral tariffs over 100%. Despite a temporary pause and adjustment to a universal 10% rate, the long-term impacts remain uncertain.

(With inputs from agencies.)