Fitch published the June issue of the Global Economic Outlook Report with the title “Monetary Policy Enters a New Phase”.
The report stated that global growth forecasts were revised upwards as confidence in the possibility of recovery in Europe increased, China’s export sector revived, and domestic demand showed a stronger momentum in emerging markets outside China.
The report noted that the growth forecast of the world economy was increased from 2.4 percent to 2.6 percent for 2024, and that the global economy is expected to grow by 2.4 percent in both years of 2025 and 2026.
THE US ECONOMY IS GRADUALLY SLOWING DOWN
The report stated that the US economy has slowed down, but this is gradual, and the growth forecast for the country’s economy has not been changed for this year, leaving it at 2.1 percent. It was reported that the US economy is expected to grow 1.5 percent in 2025 and 1.6 percent in 2026.
The report stated that the growth forecast of the Eurozone economy was revised upwards for this year, and that the growth forecast of the regional economy was increased from 0.6 percent to 0.8 percent for 2024. The report stated that the Eurozone economy is expected to grow by 1.5 percent in 2025 and 1.4 percent in 2026.
In the report, it was stated that the growth forecast of the Chinese economy was increased from 4.5 percent to 4.8 percent for this year, and that the country’s economy is expected to grow 4.5 percent in 2025 and 4.5 percent in 2026.
THE GLOBAL MONETARY POLICY CYCLE ENTERS A NEW PHASE
The report pointed out that central banks are now turning to loosening monetary policy, but stated that inflation remains surprisingly persistent and global interest rates are expected to fall at a “shallower” pace over the next 12-18 months.
The report stated that the global monetary policy cycle has entered a new phase in which interest rates will fall slowly but still to levels that will restrict demand.
The report stated that the European Central Bank (ECB) is expected to cut interest rates twice more this year, and that the US Federal Reserve (Fed) is expected to start reducing interest rates in September and make another interest rate cut in December.
The report stated that central banks are cautious about easing monetary policy too quickly, especially in light of high services inflation.
TURKEY’S GROWTH EXPECTATION HAS BEEN INCREASED TO 3.5 PERCENT FOR THIS YEAR
The report, which also includes evaluations of the Turkish economy, stated that the economy grew above expectations in the first quarter of this year due to the recovery in exports, the sharp decline in imports and the still strong domestic demand.
In the report, it was reported that the growth forecast of the Turkish economy was increased from 2.8 percent to 3.5 percent for this year. It was noted that the country’s economy is expected to grow 3 percent in 2025 and 3.2 percent in 2026.
The report states that tighter monetary policy, slower credit growth and the expected tightening of fiscal policy will help reduce inflation this year, and will contribute to the decrease in the annual rate starting from July with significant base effects, and the year-end inflation expectation is 43 percent for 2024, 23 percent for 2025 and 2026. It was recorded that it was 18.
