Fitch Ratings has raised the global growth forecast for 2023 to 2.4 per cent from its March estimate of 2.0 and noted that economic activity the world over is holding up better than as was expected.
“The biggest upgrades have been to emerging markets (EM) where incoming (macro) data have been a lot stronger than expected,” the rating agency said in a report titled ‘Global Economic Outlook – June 2023’. It upwardly revised emerging markets growth, excluding China, to 2.9 per cent from 2.0 per cent, stating that Brazil, India, Mexico, and Russia expected “substantive improvements”.
For China, it forecast 5.6 per cent growth from 5.2 per cent after a “swifter-than-expected” rebound in its economy in the January-March quarter.
“The recovery has faltered somewhat in recent months but consumption continues to normalise and macro policy is starting to be eased,” the report said, referring to the softening of monetary policy stance by various central banks.
For the US, growth in 2023 is seen at 1.2 per cent from 1.0 per cent, citing consumption and job growth remain robust, but expects a mild recession later this year to early next year.
“We still expect Fed tightening to push the economy into a mild recession, but the timing of this has been pushed out to 4Q23-1Q24.” For 2024, the US growth forecast has, accordingly, been cut to 0.5 per cent from 0.8 per cent.
Coming to India, it raised India’s growth forecast for 2023-24 to 6.3 per cent from its earlier estimate of 6.0 per cent in March — making the country one of the fastest-growing major economies in the world.
The rating agency said the stronger outturn in the January-March quarter of 2023 and near-term momentum have prompted it to upgrade India’s growth outlook.
According to the provisional estimates released by the National Statistical Office (NSO) recently, real GDP growth for 2022-23 stood at 7.2 per cent, higher than the 7 per cent as was projected earlier. An upward revision in the 2022-23 GDP numbers is expected going forward.
“Recent high-frequency data point to sustained near-term momentum as highlighted by rising PMI indices, higher car sales, and increased power consumption.”
It added the Indian economy also continues to benefit from high bank credit growth and infrastructure spending, with more to come from the latter.
At the same time, the government’s push for increased capital expenditure, moderation in commodity prices and robust credit growth are expected to support investment.
“Slowing inflation should also start to help consumers over time and households have now turned more optimistic about future earnings and employment,” it added.