The pick-up in global growth remains on track, with disappointing first-quarter US GDP data offset by better-than-expected numbers in China, and sustained growth in the eurozone and Japan, says Fitch Ratings in its Global Economic Update report.
“Weaker 1Q US growth was explained by consumption and looks to have been affected by temporary factors. Falling unemployment, wealth gains, improved consumer confidence and the prospect of income tax cuts should support a recovery in consumption from 2Q17. 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 materialise than expected,” said Brian Coulton, Fitch’s Chief Economist.
The resilience and breadth of the eurozone recovery continues, with the region posting its eighth consecutive quarter of steady growth at an annual pace of 1.5%-2%.
“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,” added Coulton.
Fitch expects world growth to rise to 2.9% in 2017 from 2.5% in 2016 and has slightly revised up its 2018 forecast to 3.1% from 3.0% in March. The US growth forecast for 2017 has been revised down slightly but this has been offset by a better outlook for China and Japan.