Next Year's Forecast Also Lowered from 1.7% to 1.5%
"Tariffs to Cause U.S. Growth Slowdown"
Global Economic Outlook Also Cut from 2.6% to 2.3%
International credit rating agency Fitch has downgraded its growth forecast for the United States this year from 2.1% to 1.7%, considering the risk of a global trade war due to the tariff policies of the Donald Trump administration.
On the 18th (local time), Fitch revised its U.S. growth forecast for 2025 in its economic outlook report, lowering it within three months. The growth forecast for 2026 was also cut from 1.7% to 1.5%.
In the report, Fitch explained the reason for the downgrade, stating, "The global trade war initiated by the new U.S. administration is expected to slow growth in both the U.S. and the world, lead to higher inflation in the U.S., and delay interest rate cuts by the U.S. Federal Reserve (Fed)."
Considering that the U.S. economy recorded strong growth rates of 2.9% in 2023 and 2.8% in 2024, the forecast of growth in the 1% range suggests a significant slowdown in U.S. growth after this year.
Fitch also analyzed that U.S. tariffs will raise U.S. inflation by about 1 percentage point in the short term.
Fitch downgraded the global economic growth forecast for 2025 from 2.6% to 2.3%, a 0.3 percentage point decrease from the previous forecast. The global economic growth forecast for 2026 was set at 2.2%. Fitch explained that this reflects broad downside pressures across both advanced and emerging economies.
While fiscal stimulus measures in China and Germany will partially offset the effects of U.S. tariffs, Fitch predicted that growth in the Eurozone will weaken more than previously expected. In particular, it projected that the U.S. tariff increases will reduce the GDP of the U.S., China, and Europe by about 1 percentage point through 2026.
Canada and Mexico, which have high trade dependence on the U.S., are expected to enter a technical recession due to the impact of tariffs. Fitch noted, "There is significant uncertainty about how far U.S. policies will go, so the assumptions in the forecast may be incorrect," but also analyzed that "there is a risk of a large-scale tariff shock, including a scenario where the global trade war intensifies."
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