Fitch: Oil price shocks drag down global growth prospects, AI investment momentum exceeds expectations

Mars Finance News, on June 4, Fitch Ratings, in its latest report titled “Global Economic Outlook,” said that the oil crisis triggered by the Iran-U.S. war has hit the global growth outlook. This prompted Fitch to cut its 2026 global growth forecast by 0.2 percentage points to 2.4%. As higher inflation squeezes real wages, suppresses consumption, and raises companies’ input costs, growth forecasts for multiple economies have been widely revised downward. However, momentum in IT investment related to artificial intelligence has been stronger than expected, providing a buffer for global economic activity and supporting world trade and Asian exports.

The closure of the Strait of Hormuz has now lasted 14 weeks, and Fitch assumes that it will start reopening only in July. The agency has raised its forecast for 2026 Brent crude oil’s average price from $70 per barrel in its March outlook to $87. While the oil shock is a strong headwind for global growth, Fitch’s baseline expectations are far less severe than during the oil crises of the 1970s. Fitch currently expects the U.S. Federal Reserve and the Bank of England to keep interest rates unchanged this year, but to resume rate cuts in 2027. The European Central Bank will raise interest rates by 25 basis points in June, but Fitch expects this trend to be reversed next year. (Jin10)