Fitch Ratings has lifted its global growth forecast for 2025 to 2.4% from 2.2%, citing stronger-than-expected second-quarter data, but said evidence of a US slowdown is mounting.

The agency noted that “hard” US economic data had shown signs of weakening, while upside surprises in eurozone growth partly reflect firms rushing to beat US tariffs.

In its September 2025 Global Economic Outlook, Fitch said the new forecast remains well below the 2.9% expansion recorded in 2024.

China’s 2025 growth projection was raised to 4.7% from 4.2%, the eurozone’s to 1.1% from 0.8%, and the US forecast nudged to 1.6% from 1.5%.

Fitch chief economist Brian Coulton said greater clarity on US tariff policy had eased some uncertainty, but the scale of tariff increases remains a major drag.

“Greater clarity about US tariff hikes does not alter the fact that they are huge and will reduce global growth. And evidence of a slowdown in the US is now appearing in the hard data; it is no longer just in the sentiment surveys,” Coulton said.

Fitch said US national accounts data suggested the tariff shock had partly been absorbed by pressure on corporate profits, but the pass-through to prices is expected to accelerate later this year.

Rising inflation is set to curb real wage growth and weigh on consumer spending, which has already slowed sharply in 2025. Job creation has also weakened, in part due to tighter immigration cutting labour force growth, it added.

While a widening fiscal deficit should support demand in 2026, Fitch expects US gross domestic product (GDP) growth to remain well below trend at 1.6% next year.

In China, exports have held up despite the tariff shock, helped by a weaker effective exchange rate and falling export prices that redirected overseas sales. Fiscal easing is propping up growth, but private domestic demand is softening and deflation risks are deepening, Fitch said.

For Europe, the agency said exports are unlikely to sustain their first-half pace, and with consumer recovery fading, GDP is not expected to grow in the second half of 2025.

“German fiscal easing will provide more support next year,” it added.

Looking ahead, Fitch expects the US Federal Reserve to cut interest rates twice before year end and three more times in 2026, while the European Central Bank is not expected to loosen policy further.

It added that long-term 30-year government bond yields in the US, UK, Germany and Japan remain under upward pressure, possibly reflecting supply concerns.