Fitch Ratings has revised down its global growth forecast for this year and next despite signs of strengthening economic momentum in the US.
The downgrade comes as the Organisation for Economic Co-operation and Development (OECD) warns that the US and Europe face “separate growth tracks”.
In its latest quarterly Global Economic Outlook, Fitch predicts that the global economy will expand by 2.3% during 2012 and by 2.9% in 2013, down from its previous forecasts of 2.4% and 3.0%, respectively.
Fitch anticipates growth in major advanced economies (MAEs) to amount to a “weak” 1.1% in 2012, down from its prior estimate of 1.2%, before accelerating to 1.8% over the following year.
Gergely Kiss, director in Fitch’s sovereign team, says the eurozone is likely to show the weakest growth rates of all MAEs with contraction of 0.2% seen in 2012 and growth of just 1.1% in 2013.
“Sizeable fiscal austerity measures and the more persistent effect of tighter credit conditions on the broader economy remain key obstacles to growth,” he adds.
The UK and Japan are expected to grow during 2012 by a respective 0.5% and 1.9%.
“Robust” growth is forecast this year for the so-called Bric nations of Brazil, Russia, India and China, although China’s expansion is likely to slow further.
The US stands in contrast to most MAEs, with 2012 growth upgraded from 1.8% to 2.2% while 2013’s prediction has been maintained at 2.6%.
“Growth is supported by the stronger-than-expected improvement in labour market conditions and indicators pointing to strengthening business and household confidence,” Fitch says.
In its latest Interim Economic Assessment, the OECD predicts that growth in G7 countries will be firmer over the first half of 2012 although recovery is likely to progress at different paces in North America and Europe.
Pier Carlo Padoan, chief economist at the OECD, says: “Our forecast for the first half of 2012 points to robust growth in the United States and Canada, but much weaker activity in Europe, where the outlook remains fragile.
“We may have stepped back from the edge of the cliff, but there’s still no room for complacency.”
Yesterday, the Office for National Statistics revised down the UK’s growth for the fourth quarter, saying the economy likely contracted by 0.3% over the three-month period.
The organisation’s earlier estimates suggested a 0.2% contraction.