Massive tech investment and strong stock markets are outweighing the drag from higher tariffs, boosting the outlook for global growth, says Fitch Ratings.
In a report, the rating agency said it’s raising its global GDP growth forecast to 2.5% this year and 2.4% next year — although this still represents a slowdown from the 2.9% growth recorded in 2024.
The global forecast was raised on the strength on upward revisions for U.S. and European GDP growth.
Fitch now expects 1.8% growth in the U.S. this year, up by 0.2 percentage points from its previous forecast; and 1.9% growth in 2026, an increase of 0.3 percentage points.
“We have also raised eurozone GDP growth by similar amounts,” it said.
The rating agency also nudged this year’s forecast for China up a bit, to 4.8% — but it’s still expected to slow to 4.1% in 2026.
Fitch said its rising global forecast is underpinned by a combination of surging investment, driven by the enthusiasm for AI and the wealth effect from robust equity markets.
“We have substantially revised up our U.S. private investment forecasts since September,” Fitch said, noting that capital spending on tech accounted for almost 90% of U.S. GDP growth in the first half of 2025 — and, in turn, this trend is boosting equity markets, which is driving higher consumer spending.
“The AI revolution has prompted additional private-sector spending on a scale that is heavily cushioning the adverse impact of tariff hikes on the U.S. economy. The robots have come to the rescue,” said Brian Coulton, chief economist at Fitch, in a research note.
At the same time, the boom in AI investment and in stock markets is sparking concerns about ‘bubble’ risks in the financial system, the report said.
“U.S. equity markets certainly look very rich on multiple valuation metrics. But the capex boom has momentum and has not yet been associated with significant increases in corporate indebtedness,” it noted.
Fitch also said that, “Some of the recent resilience in global growth is simply the corollary of rapidly rising public debt” — as high levels of government borrowing boost aggregate demand.
Against that backdrop, it expects the U.S. Federal Reserve to keep rates on hold in December, but to cut rates three times by next June, “as the tariff shock stabilizes and the unemployment rate edges up.”
Fitch also expects three rate cuts from the Bank of England next year, but said that the European Central Bank is forecast to leave rates unchanged.