Fitch Says World Economy is Cooling Down, But Not as Bad as Feared

The global economy is still slowing down, but Fitch Ratings says it’s holding up a little better than expected.

In its latest report, the ratings agency bumped up its forecast for world growth in 2025 to 2.4 percent. That’s a tiny lift from the 2.2 percent it predicted back in June. But don’t cheer too loudly — growth was 2.9 percent last year, so the trend is still down.

What’s driving the changes?

The US is starting to show signs of slowing in real, “hard” data like factory output and consumer spending.

Europe has surprised on the upside, though part of that is companies rushing orders ahead of new US tariffs.

China looks a bit stronger, with Fitch raising its growth forecast there from 4.2 percent to 4.7 percent.

The eurozone is also doing slightly better, now expected to grow 1.1 percent.

The US nudged up too, but only from 1.5 percent to 1.6 percent.

Looking ahead, Fitch sees world growth dipping further to 2.3 percent in 2026.

Tariffs remain a big factor. The US’s effective tariff rate now averages about 16 percent, close to what Fitch had assumed earlier. Canada and Mexico are being treated more gently thanks to the USMCA trade deal, and Europe’s rate is a little lower too. But much of Asia outside China is facing higher tariff rates than expected.

Bottom line: The world economy is cooling, but the slowdown isn’t as brutal as many feared back in June.