The world economy shows signs of slowing down despite recent forecast adjustments. Fitch Ratings’ global growth forecast for 2025 now stands at 2.4%, up from their earlier 2.2% projection, which suggests a slight improvement in economic expectations. Yet this upward revision still points to a considerable slowdown in worldwide economic activity.
The revised 2.4% growth projection falls short of 2024’s robust 2.9% expansion. Regional differences shape the global economic outlook. China’s growth forecast for 2025 has jumped to 4.7% from 4.2%, while the Eurozone’s numbers improved to 1.1% from 0.8%. The US forecast saw a modest bump to 1.6% from 1.5% [-4]. These positive adjustments cannot prevent what seems to be an unavoidable economic slowdown, as the world’s major economies face mounting challenges as they head into 2025.
Fitch raises global economic growth forecast to 2.4% for 2025
Image Source: International Monetary Fund (IMF)
“Fitch now anticipates a global GDP growth of 2.4% this year, an increase of 0.2 percentage points from June, but a substantial slowdown compared to last year’s 2.9%, and below the trend.” — Fitch Ratings, International Credit Rating Agency
Fitch Ratings has raised its global economic growth forecast in its latest quarterly review. The agency now expects worldwide growth to reach 2.4% in 2025, which is 0.2 percentage points higher than its June outlook. Economic signals from major economies paint a mixed picture.
The positive adjustment shows a clear slowdown from 2024’s growth of 2.9%. Fitch’s Global Economic Outlook report suggests growth rates are nowhere near long-term trends, which points to ongoing economic challenges worldwide.
The agency’s 2026 global growth forecast has improved slightly by 0.1 percentage points to 2.3%. This suggests subdued growth conditions will continue in the medium term.
Strong performance data from China and the eurozone led to this upward revision. The improvements balance against a clear economic slowdown in the United States. Hard economic data now confirms this trend, not just sentiment surveys.
Other international organizations see different outcomes. The IMF takes a more optimistic view and projects global growth at 3.3% for both 2025 and 2026. The UN’s economic analysis tells a different story, with global GDP growth expected at 2.4% in 2025, which is 0.4 percentage points lower than earlier forecasts.
US slowdown emerges despite earlier optimism
Image Source: Bloomberg
“The drag comes largely from the US. Fitch said evidence of a slowdown is now clear in hard data, not just sentiment surveys.” — Fitch Ratings, International Credit Rating Agency
The US economy shows worrying signs of slowdown after its strong start. Latest numbers reveal a sharp decline in consumer spending – the force behind 70% of US economic activity. Growth fell to 0.5% in Q1 2025 and 1.4% in Q2 2025, a steep drop from the 4.0% growth seen in late 2024. Service sector growth has also cooled, with just a 0.6% increase in early 2025.
Trump’s tariffs create major economic challenges. These policies could shrink US GDP by 0.9%, without even considering how other countries might react. These trade measures mark the biggest tax increase since 1993 and will add AED 632.68 billion to federal revenues in 2025. American households will feel this pinch with an extra tax burden of AED 4773.52 in 2025.
The job market raises red flags too. Industries that depend on immigrant workers have hit a standstill since early 2025. The number of immigrant arrests has jumped to three times the 2024 levels. This has led to about 1.2 million fewer foreign-born workers in the labor force since January.
The Conference Board’s Leading Economic Index dropped 0.1% in July after falling 0.3% in June. Their latest predictions put US growth at just 1.6% for 2025, dropping further to 1.3% in 2026. July saw corporate bankruptcies reach levels not seen since 2020.
China and Eurozone show mixed signals amid global uncertainty
Image Source: MacroMicro
China and the Eurozone show different economic patterns as global markets remain uncertain. China’s export growth hit a six-month low at 4.4% in August, while exports to the U.S. dropped 33% due to trade tensions. The country has successfully expanded into new markets, with shipments soaring by 10.4% to the European Union, 22.5% to ASEAN, and 26% to Africa.
China’s economy grew by 5.3% in 2025’s first half, with exports driving over one-third of this growth. However, domestic spending remains weak. Chinese households added 10 trillion RMB to their savings in the first six months of 2025, which signals widespread consumer hesitation.
The Eurozone’s economy grew slightly by 0.1% in the second quarter, beating analyst forecasts. Spain leads the pack with impressive quarterly growth of 0.7% (2.8% year-on-year). Germany’s economy tells a different story – it faces stagnation in 2025 before a possible uptick to 1.1% growth in 2026.
Germany has responded to these economic challenges with record investments of 126.7 billion euros planned for 2026. The country also plans to boost defense spending to 3.5% of GDP by 2029. These fiscal steps should help curb ongoing pressures from U.S. tariffs that affect consumption, investment, and exports throughout the region.
Economic data shows tough times ahead for the global economy. Fitch has raised its global growth forecast to 2.4% for 2025. This number marks a slowdown from 2.9% growth in 2024. The world economy shows different patterns across regions. China remains strong with 4.7% expected growth but faces challenges in domestic spending. Growth stays modest at 1.1% in the Eurozone. The US economy might grow by just 1.6%.
Major economies show worrying signs. US consumers have cut back on spending. New tariff rules create problems, and the job market faces pressure. China has found new export markets but domestic demand remains weak as people save more money. Europe’s economy tells two different stories – Spain grows well while Germany stays flat.
The future might be even tougher. Fitch thinks global growth will slow to 2.3% in 2026. This number sits well below the IMF’s more positive 3.3% forecast. These different views show how hard it is to predict where the global economy is heading.
Policy makers have tough choices to make. Central banks must control inflation without hurting growth. Governments need ways to boost their economies while watching their spending. Businesses and investors will have to work with slower growth and might need to change their plans.
The world economy needs careful handling now. Countries, companies and people must stay strong and ready to change as needed.
