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Both Europe and the U.S. are on track to slip into a recession, says Fitch Ratings, as it slashes its global economic forecast.

The rating agency cut its forecast of the world’s gross domestic product by half a percentage point to 2.4% this year, and by a full point next year to 1.7%.

Along the way, both the eurozone and the U.K. are expected to fall into recession this year, with the U.S. undergoing a “mild” recession next year, it said.

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Fitch slashed its forecast for Europe by 2.2 percentage points, and now expects the economy to contract by 0.1% in 2023.

For the U.S., it now sees growth of 1.7% in 2022, down by 1.2 percentage points, and growth of just 0.5% in 2023, a one percentage point drop for its forecast.

It also cut its forecast for China by 0.9 percentage points to 2.8% this year, noting that its recovery “is constrained by Covid-19 pandemic restrictions” and the ongoing turmoil in its real estate sector.

China is expected to rebound to 4.5% growth in 2023, although this also represents a downward revision of 0.8 percentage points from its previous forecast.

“We’ve had something of a perfect storm for the global economy in recent months, with the gas crisis in Europe, a sharp acceleration in interest rate hikes and a deepening property slump in China,” said Brian Coulton, chief economist at Fitch, in a release.

Indeed, Fitch’s forecast now assumes that Russian pipeline gas to Europe will be completely shut off.

“Despite EU efforts to find alternatives, total EU gas supply will fall significantly in the near term, with impacts felt through industrial supply chains. These supply-side impacts would be exacerbated if rationing became necessary to avoid outright gas shortages, a key risk in Germany,” it said.

Already, wholesale gas and electricity prices have jumped by almost 10 times, the rating agency noted. And, while governments are devising solutions to cushion the impact on retail customers, these measures “could have significant fiscal costs,” it said.

Additionally, interest rates are now rising much faster than previously expected, Fitch said.

“In contrast to the role of quantitative easing in the pandemic, central bank policies are no longer supportive of fiscal easing to protect households and firms from economic shocks. With liquidity conditions tightening, large-scale fiscal easing could push up long-term real interest rates,” it said.