Fitch Ratings Inc. said it again revised down world GDP forecasts for 2023 "as central banks intensify their fight against inflation and the outlook for China's property market deteriorates."
Fitch said it now expects 2023 world GDP growth of 1.4%, down from the 1.7% expectation in the September Global Economic Outlook.
U.S. growth is now forecast at 0.2% for 2023, down from an earlier prediction of 0.5% "as the pace of monetary policy tightening increases," Fitch said. The agency said its latest forecast of a peak Fed rate, at 5%, is up 100 basis points from September.
China's growth forecast has been cut to 4.1% for 2023, down from 4.5%, "as prospects for a recovery in housebuilding fade," Fitch said. According to Fitch, the economic slowdown in China "has eased pressure on global commodity prices, but the country is a huge net supplier of goods and pandemic-related disruptions to exports could hit global manufacturing supply chains."
Eurozone 2023 growth expectations are now 0.2%, up from an earlier -0.1%, as the European gas crisis has eased, Fitch said. However, sharper European Central Bank rate rises will weigh on demand.
"The risk of European natural-gas shortages and rationing this winter has receded as LNG imports have surged and gas consumption has fallen. But the crisis is far from over and high wholesale gas prices continue to weigh heavily on firms' costs and household budgets," Fitch said.
According to Fitch, recessions are anticipated in the eurozone and U.K. starting later this year, and in the U.S. in the second and third quarters of next year. Unemployment is seen rising above 5% in the U.S. and U.K. in 2023, Fitch said.