MANILA – The global economy is strengthening and growth is expected to hit 2.9 percent this year and 3.1 percent in 2018, according to debt watcher Fitch Ratings in its latest Global Economic Outlook.
“Faster growth this year reflects a synchronized improvement across both advanced and emerging market economies. Macro policies and tightening labor markets are supporting demand growth in advanced countries, while the turnaround in China’s housing market since 2015 and the recovery in commodity prices from early 2016 has fueled a rebound in emerging market demand,” said Brian Coulton, Fitch’s Chief Economist.
Fitch noted the improvement in the eurozone economies which are now expected to grow 2.0 percent this year.
The debt watcher however, also took note of the “evolving monetary policy outlook” in advanced economies. Fitch said China is tightening credit conditions, while the Fed looks set to pursue three or four rate hikes per year through 2019.
“With the Fed now signalling that QE will start to be unwound later this year, these monetary policy adjustments could spark some volatility in global financial markets attuned to persistent monetary accommodation,” added Coulton.
The ratings firm also noted the recovery in larger emerging market economies like Brazil and Russia. Fitch said the latest data suggest consumption and investment is starting to pick up in Russia.
“The two key downside risks identified last quarter – eurozone fragmentation risk and aggressive US-led protectionism – have not gone away but have certainly diminished somewhat in recent months,” noted Coulton.
Fitch said Emmanuel Macron’s decisive victory in the French Presidential election, as well as his party’s success in National Assembly elections, have eased concerns about anti-European and anti-euro sentiments gaining additional traction.
Fitch also noted that the US has not made aggressive unilateral measures on trade despite US President Donald Trump’s tough protectionist rhetoric during the campaign period.
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