Sri Lanka, March 19 -- The new US administration has started a global trade war that will reduce US and world growth, push up US inflation and delay Federal Reserve rate cuts, Fitch Ratings believes.
We have cut both our US 2025 growth forecast to 1.7% from 2.1% in the December 2024 Global Economic Outlook (GEO) and our 2026 forecast to 1.5% from 1.7%. These rates are well below trend and down from almost 3% annual growth in 2023 and 2024.
Fiscal easing in China and Germany will cushion the impact of higher US import tariffs, but growth in the eurozone this year will still be a lot weaker than forecast in the December GEO. Mexico and Canada will experience technical recessions given the scale of their US trade exposures, and we have cut t...