We have revised up our annual global GDP forecasts for all years in the Global Economic Outlook (GEO) forecast horizon – Fitch Ratings wrote in its recent Global Economic Outlook – December 2020 sub-titled ‘Light at the End of the Tunnel’.
Fitch Ratings now expects world GDP to fall by 3.7% in 2020 compared to a fall of 4.4% expected in the previous GEO. According to Fitch, the revision reflects a stronger-than-expected recovery in 3Q20. “As well as being widespread, this outperformance was on a sufficient scale to leave annual GDP in 2020 at a higher level than in the September GEO despite factoring in renewed declines in GDP in 4Q20 in Europe. Nevertheless, the decline is still nearly twice as deep as that in 2009, when world GDP fell by 2.1%” – Fitch explained.
Fitch Ratings has also raised its forecast for world GDP growth in 2021, but only by 0.1pp to 5.3%. Also, expected stronger growth in both the US and China next year is largely offset by weaker growth in Europe. “A growth rate of more than 5% would be very high by historical standards – world GDP has averaged 2.6% a year since 1990 – but has to be seen in the context of the low base in 2020” – Fitch stated in a recent GEO.
Fitch Ratings’ forecast for 2022 has seen a more significant revision to 4% from 3.6% in September. According to the influential rating organization, this reflects both the new assumption on global vaccine rollout and the incorporation of the NGEU stimulus into our eurozone forecasts. “The upward revision to 2022 implies a significantly faster recovery from the trough than that which followed the global financial crisis (GFC). World GDP in 2022 would, however, still be around 2.5% below the level implied by our pre-virus forecasts” – Fitch Ratings stated.
