Fitch: Oil Price Shock Weighs on Global Growth Outlook, AI Investment Momentum Exceeds Expectations
BlockBeats News, June 4th - Fitch Ratings stated in its latest "Global Economic Outlook" report that the oil crisis triggered by the US-Iran war has impacted the global growth prospects. This has led Fitch to downgrade its 2026 global growth forecast by 0.2 percentage points to 2.4%. Due to high inflation squeezing real wages, suppressing consumption, and raising corporate input costs, growth forecasts for multiple economies have been widely revised down. However, IT investments related to artificial intelligence have shown stronger momentum than expected, providing a cushion for global economic activity, supporting world trade, and Asian exports.
The closure of the Strait of Hormuz has now lasted for 14 weeks, with Fitch assuming it will only begin to reopen in July. The institution has revised up its 2026 Brent crude oil average price forecast from $70 per barrel in March to $87. The oil shock is a strong headwind for global growth, but Fitch's baseline expectations are far from being as severe as during the 1970s oil crisis. Fitch currently expects the Fed and the Bank of England to keep rates unchanged this year, but to resume cuts in 2027. The ECB will raise rates by 25 basis points in June, but Fitch expects this trend to reverse next year. (FXStreet)
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