Global Economic Growth Better than Expected in Q1 –Fitch
The global economy got off to a better than expected start in 2023 with growth significantly beating forecasts for China and broadly matching expectations for the United States and the Eurozone, Fitch Ratings says in its latest ‘20/20 Vision’.
According to the firm, growth in the larger eurozone countries exceeded expectations. In the US, growth slowed sharply from the previous quarter but consumption growth picked up.
Fitch noted that a combination of China’s reopening, a significant easing of the natural gas crisis in Europe and a resilient US consumer accounted for the better outturns.
China’s economy grew by 2.2% quarter on quarter in 2023, more rapidly than Fitch Ratings forecast of 1.4% in March’s Global Economic Outlook (GEO).
This was driven by a strong rebound in both exports and consumption, according to the global rating agency. It said the lifting of Covid-19 restrictions has resulted in a rapid recovery in the service sector and property sales have stabilised.
US headline growth of 0.3% quarter on quarter (non-annualised) was just below the 0.4% Fitch expected in March’s GEO and half the 0.6% increase in 4Q-2022.
In terms of the composition of US growth, strong consumption and a pick-up in exports were offset by a contraction in investment, the fourth consecutive quarterly decline, and falling inventories.
The euro area grew by 0.1%, in line with the GEO. However, Italy and Spain exceeded Fitch Ratings expectations, seeing strong gains of 0.5% compared to -0.2% and zero, respectively, in the GEO.
France recorded a modest gain of 0.2% while Germany saw zero growth after a quarterly contraction of 0.5% in 4Q-2022.
