Fitch Cuts Global Growth Forecast to 3.5% This YearFitch this Monday cut the forecast for world GDP growth this year to 3.5%, and in the case of the euro zone the agency revised downwards the estimate to 3% and in the US to 3.5%.
In its ‘Global Economic Outlook‘ for March this year, published this Monday, the agency lowered its forecast for world Gross Domestic Product (GDP) growth for this year by 0.7 percentage points (pp) to 3, 5%. In the case of the euro zone, the reduction is of 1.5 p.p., to 3%, and in the US, of 0.2 p.p., to 3.5%, he highlighted.
“This reflects the weight of energy prices and an acceleration of interest rate increases in the US faster than anticipated”, indicated Fitch, noting that it lowered its forecast for world growth also in 2023, by 0.2 pp, to 2.8%.
ECB warns that rising gas prices could reduce economic activity
The agency said the European Union’s (EU) plan to cut Russian gas imports by two-thirds by the end of this year “seems ambitious,” according to the analysis.
“The war in Ukraine and economic sanctions on Russia have put global energy supplies at risk. It is unlikely that sanctions will be lifted anytime soon,” it said.
“Russia supplies around 10% of the world’s energy, including 17% of natural gas and 12% of oil,” the agency said, noting that, among the effects of the conflict, in addition to the reduction in consumers’ purchasing power, due to price increase “there may even be a shortage and rationing of energy in Europe”.
Fitch recalled the EU’s announced plan to ensure security of supply over the coming winter, should Russian gas supplies be reduced, which includes incentives and cost-sharing strategies between member states, as well as efforts to secure gas imports. liquefied natural gas (LNG) from locations other than Russia, as well as an acceleration of investment in renewable energy.
“The plan alludes to the possibility of reducing demand for Russian gas imports by two thirds before the end of 2022. This seems ambitious, in Fitch‘s opinion,” he said, warning that the high volumes of LNG imports needed given the size of market will lead to “fierce” competition.
Still, Fitch noted, it is highly likely that there will be coordinated EU budget support to help alleviate the effect of rising prices on households and businesses.
In its ‘Global Economic Outlook‘ for March this year, published this Monday, the agency lowered its forecast for world Gross Domestic Product (GDP) growth for this year by 0.7 percentage points (pp) to 3, 5%. In the case of the euro zone, the reduction is of 1.5 p.p., to 3%, and in the US, of 0.2 p.p., to 3.5%, he highlighted.
“This reflects the weight of energy prices and an acceleration of interest rate increases in the US faster than anticipated”, indicated Fitch, noting that it lowered its forecast for world growth also in 2023, by 0.2 pp, to 2.8%.
ECB warns that rising gas prices could reduce economic activity
The agency said the European Union’s (EU) plan to cut Russian gas imports by two-thirds by the end of this year “seems ambitious,” according to the analysis.
“The war in Ukraine and economic sanctions on Russia have put global energy supplies at risk. It is unlikely that sanctions will be lifted anytime soon,” it said.
“Russia supplies around 10% of the world’s energy, including 17% of natural gas and 12% of oil,” the agency said, noting that, among the effects of the conflict, in addition to the reduction in consumers’ purchasing power, due to price increase “there may even be a shortage and rationing of energy in Europe”.
Fitch recalled the EU’s announced plan to ensure security of supply over the coming winter, should Russian gas supplies be reduced, which includes incentives and cost-sharing strategies between member states, as well as efforts to secure gas imports. liquefied natural gas (LNG) from locations other than Russia, as well as an acceleration of investment in renewable energy.
“The plan alludes to the possibility of reducing demand for Russian gas imports by two thirds before the end of 2022. This seems ambitious, in Fitch‘s opinion,” he said, warning that the high volumes of LNG imports needed given the size of market will lead to “fierce” competition.
Still, Fitch noted, it is highly likely that there will be coordinated EU budget support to help alleviate the effect of rising prices on households and businesses.