International credit ratings agency Fitch Ratings has announced that it has reduced its forecast for global economic growth in 2026, citing the economic consequences of the ongoing conflict between the US and Iran and the resulting disruption to global energy markets.
In its latest Global Economic Outlook, Fitch lowered its projection for global GDP growth by 0.2 percentage points to 2.4 percent. The agency said rising energy prices are expected to weaken economic activity by increasing inflationary pressures, reducing household purchasing power and raising operating costs for businesses.
At the same time, Fitch noted that the negative impact of higher oil prices is being partially offset by stronger-than-expected growth in artificial intelligence-related investment and broader technology spending, which continue to support global trade and industrial activity.
US and eurozone forecasts revised downward
Fitch reduced its 2026 growth forecast for the United States by 0.3 percentage points to 1.9 percent, while its projection for the eurozone was cut by 0.4 percentage points to 0.9 percent. The agency also lowered its growth outlook for emerging markets excluding China by 0.2 percentage points to 3.2 percent.
In contrast, China’s economic outlook improved. Fitch increased its 2026 growth forecast for China by 0.3 percentage points to 4.6 percent, citing stronger-than-expected economic performance during the first quarter and resilient export activity. South Korea’s growth outlook was also upgraded due to continued strength in technology-related exports.
Brian Coulton, chief economist at Fitch Ratings, stated that while the oil shock is creating additional downside risks for the global economy, the ongoing expansion of information technology investment is helping cushion the impact, particularly across Asia.
Oil price assumptions revised sharply higher
Fitch assumes that the closure of the Strait of Hormuz, which has now lasted 14 weeks, will continue through July. As a result, the agency raised its average Brent crude oil forecast for 2026 to $87 per barrel, significantly above the $70 per barrel assumption used in its March outlook.
Despite the increase, Fitch emphasized that current market conditions remain less severe than the oil crises experienced during the 1970s. The agency noted that oil consumption relative to global economic output has declined by roughly 50 percent since 1980, reducing the overall sensitivity of the global economy to energy price shocks.
Downside scenario points to significantly weaker growth
Fitch also evaluated a more pessimistic scenario in which Brent crude oil averages $100 per barrel throughout 2026, global equity markets decline by 10 percent and financial conditions tighten. Under this scenario, US economic growth would slow to 0.8 percent during the 12 months through the first quarter of 2027. Eurozone growth would fall to just 0.3 percent, while China’s growth rate would decline to 3.4 percent.
Technology investment remains key growth driver
A major factor supporting the global outlook is the continued expansion of technology investment. According to Fitch, US information technology investment increased by 18 percent year on year during the first quarter of 2026. Meanwhile, global semiconductor sales surged by 80 percent year on year in March. Strong technology demand has also supported exports and economic growth in major Asian economies, including China, Taiwan and South Korea. The agency believes that continued investment in artificial intelligence infrastructure, semiconductors and digital technologies will remain an important source of economic resilience despite broader macroeconomic challenges.
Central banks expected to remain cautious
Fitch expects higher energy prices to influence monetary policy decisions across major economies. The agency now forecasts that both the US Federal Reserve and the Bank of England will keep interest rates unchanged for the remainder of 2026 before resuming rate cuts in 2027. Meanwhile, the European Central Bank is expected to raise interest rates by 25 basis points in June. However, Fitch anticipates that this increase will be reversed next year as inflationary pressures ease and economic growth remains subdued.
In addition to monetary policy support, Fitch expects fiscal measures to contribute to economic activity. A wider US budget deficit is projected to support domestic growth, while increased defense spending is expected to add a cumulative 0.8 percent to Germany’s GDP over the next three years.