October 2021: Global Recovery Hitting Resistance

• Fitch Solutions has revised its 2021 global growth forecast from 5.7% to 5.6%, reflecting a further weakening of economic momentum across developed markets (DMs) and emerging markets (EMs). This is a touch weaker than the 5.9% consensus forecast collected by Bloomberg. 
• Despite a more pessimistic view generally, it has revised its projections for the eurozone (from 4.6% to 4.9%) – owing to stronger expected growth in France (5.2% to 5.9%) and Ireland (6.5% to 11.4%). 
• However, downward revisions in Asia (most notably China) and Middle East and North Africa (MENA) have more than offset these upward adjustments. Fitch cut its 2021 growth forecast for China by 0.7 percentage points to 7.8% to reflect a plethora of intensifying headwinds. These include, negative growth spill-overs from Evergrande’s financial difficulties, further outbreaks of COVID-19, Beijing’s regulatory campaign and pursuit of ‘common prosperity’ and power shortages. 
• High-frequency data continue to point to a weakening of growth momentum across DMs and EMs, supporting the view that global growth has peaked. Composite PMIs for both DMs and EMs fell in September, with the EM measure slipping below the neutral 50-mark threshold for the first time since July 2020.

(Source: Fitch Solutions)