It also reports Eurozone GDP grew by 0.3%, quarter-on-quarter, for the second consecutive quarter in Q2 2024.
< img class="aligncenter" src="/media-library/2024/08/097c309bee92144f265791830275df01.jpg" alt="Στο 0.8%, απo 0.6%, αν αιεανπτσε&omega ;ζoνης το 2024" />
In upgrading its forecast for real GDP growth in 2024 to 0.8%, from 0.6% , credit rating agency Fitch said on Monday, which also upgraded its estimate for UK growth to 0.7% from 0.2%.
In a new report on the outlook for the world economy, entitled “Economic recovery in advanced Europe under way, strengthening of private consumption”, the American house says that its estimate for the growth of the Eurozone in 2024 is based on the strengthening of private consumption, based on continued growth in employment and real wages, noting at the same time that “there is room for the normalization of the household savings rate”.
It adds that lower wholesale gas prices have largely reversed the terms-of-trade shock, boosting real incomes alongside deflation.
It also says Eurozone GDP rose by 0.3%, quarter-on-quarter, for the second consecutive quarter, in Q2 2024.
Germany's economy contracted slightly, according to Fitch, “but we believe its energy-intensive industries are finally starting to to recover from the energy shock”.
“The impact of monetary tightening is fading but still weighing on some weaker borrowers,” it says, noting that “the ECB has stressed that interest rates will remain clearly 'restrictive'”.
“The interest rate cycle is reversing, although Central Banks remain wary of easing too quickly,” he underlines.
The US house also says the ECB's rate cut is expected to provide some relief to floating-rate borrowers, adding, however , that bond yields in the primary market will remain higher, compared to old coupons, “delaying the refinancing of high-yield, fixed-coupon bonds.”
Finally, Fitch reports that the fiscal politics is in focus as states aim to reduce budget deficits.
“Political uncertainties remain a potential source of risk, as highlighted by the early elections in France,” he concludes.
