The global economic recovery is on track, with unexpected strength in China helping to offset weaker U.S. growth, according to an economic outlook published Tuesday Fitch Ratings.
The outlook indicates that Fitch expects global gross domestic product (GDP) growth to rise to 2.9% this year, from 2.5% in 2016. The credit rating agency has slightly revised its 2018 forecast for global growth to 3.1%, up from its previous call of 3.0%.
Fitch has revised its U.S. outlook for 2017 slightly lower, but that this is countered by a brighter outlook for China and Japan. Already this year, it says that “disappointing” first-quarter (Q1) U.S. GDP data is being offset by stronger-than-expected growth in China, and continued growth in Europe and Japan.
“Weaker Q1 U.S. growth was explained by consumption and looks to have been affected by temporary factors,” says Brian Coulton, chief economist, Fitch Ratings, in a statement. “Falling unemployment, wealth gains, improved consumer confidence and the prospect of income tax cuts should support a recovery in consumption from Q2 2017.”
“In China, the impact of earlier policy stimulus on activity has proved more powerful than anticipated and the slowdown in the housing market has taken longer to materialize than expected,” Coulton adds.
Additionally, the recovery in Europe is continuing. “Rising bank credit to the private sector and strengthening housing markets suggest accommodative monetary policies are gaining traction in the eurozone, while a mild easing of fiscal policy since 2015 and strong job growth have also helped,” Coulton says.