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Tags: Fitch | Cuts | Global | Economic | Forecasts | Oil | japan

Fitch Cuts Global Economic Forecasts on Oil, Japan Impact

Thursday, 31 March 2011 10:04 AM

Fitch Ratings cut its global economic growth forecasts for this year and next due to the impact of rising oil prices and the earthquake and tsunami in Japan.

The ratings company lowered its projections for growth in the U.S., Japan and the euro area for 2011 and said global expansion will slow to 3.2 percent from 3.8 percent in 2010, according to a report published in London today.

Crude oil prices have surged about 32 percent in the past six months, squeezing companies’ profits and undermining demand. At the same time, the resulting surge in inflation from higher energy costs is likely to prompt an “earlier policy response” from central banks than previously forecast, Fitch said.

“Inflationary pressures have increased in both advanced economies and emerging markets, exacerbating the policy dilemma faced by many monetary policy authorities,” said Maria Malas- Mroueh, a director in Fitch’s sovereign team.

Fitch sees the U.S. economy, the world’s largest, growing 3 percent in 2011 and 2.8 percent in 2012, lower than the previously forecast rates of 3.2 percent and 3.3 percent. For Japan, Fitch cut its 2011 projection to 1 percent from 1.5 percent and raised its 2012 outlook to 2.2 percent from 1.7 percent, reflecting an increase in reconstruction spending after the March 11 earthquake.

The euro-area economy will expand 1.2 percent this year and 1.8 percent in 2012, according to Fitch, lower than the 1.6 percent and 2.1 percent rates it projected previously.

Fitch also cut its forecasts for Brazil, China and India, while the increase in oil prices led to a ‘small upward revision” to Russia’s forecast.

© Copyright 2022 Bloomberg News. All rights reserved.


Economy
Fitch Ratings cut its global economic growth forecasts for this year and next due to the impact of rising oil prices and the earthquake and tsunami in Japan. The ratings company lowered its projections for growth in the U.S., Japan and the euro area for 2011 and said...
Fitch,Cuts,Global,Economic,Forecasts,Oil,japan,Impact
266
2011-04-31
Thursday, 31 March 2011 10:04 AM
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