FX.co ★ Fitch cuts global growth forecast as Iran conflict lifts oil to $87 per barrel

Fitch Ratings has downgraded its global growth forecast for the current year and raised expectations for oil prices. In a new report, the agency said that a prolonged energy shock caused by a war between the US and Iran prompted the reassessment. Analysts now expect world GDP growth to be of 2.4%, which is 0.2 percentage points below the previous estimate. Economists warn that rising inflation is eroding real wages, suppressing consumer activity, and increasing corporate costs worldwide.

Fitch raised its average Brent outlook for 2026 to $87 per barrel, up from $70. The revision reflects a prolonged blockade of the Strait of Hormuz that has entered its 14th week. What is more, a resumption of shipping by July remains unlikely because of a stalemate in talks between Washington and Tehran. In its baseline scenario, Fitch predicts 1.9 % growth in the US economy and 0.9% expansion in the eurozone economy. The forecast for China was lifted to 4.6% on the back of strong first quarter performance and resilient exports. The Federal Reserve and the Bank of England are likely to keep policy rates unchanged this year, while the European Central Bank may move to raise rates in June.

Fitch also modeled a negative scenario. If the average price of oil reaches $100 per barrel and equity markets fall 10%, over the next 12 months, GDP growth in the US could slump to 0.8%, in the eurozone - to 0.3%, and in China - to 3.4%. The only significant counterweight to the downside is a boom in artificial intelligence spending. Brian Coulton, Fitch’s chief economist, said a large global investment surge in information technology is materially softening the short‑term blow to economic activity, especially in Asia.