Global Growth to Remain Steady in 2026 if oil Price Shock is Short-lived – Fitch Ratings
Global economic growth is expected to remain broadly stable in 2026, provided the recent surge in oil prices proves temporary, according to the March 2026 Global Economic Outlook released by Fitch Ratings.
The ratings agency noted that the global economy has remained resilient despite a series of geopolitical developments and policy shocks originating from the United States. Global growth stood at 2.7% in 2025, broadly in line with the long-term average.
Assuming the recent spike in oil prices is short-lived, Fitch projects global growth to ease slightly to 2.6% in 2026, revised upward from the 2.4% forecast in its December outlook.
The firm explained that strong investment in artificial intelligence, sizeable fiscal deficits in both the United States and China, and stronger US consumer spending supported by equity market gains helped cushion the impact of higher US tariffs in 2025.
US consumption expected to moderate
According to Fitch, household consumption in the United States is expected to slow this year as labour market weakness weighs on household income.
“We expect US consumption to slow in 2026 as labour market weakness weighs on household income, but the US fiscal deficit is widening again,” the agency stated.
Fitch forecasts US GDP growth at 2.2% in 2026, revised upward from its earlier 2% estimate in January and unchanged from the 2025 growth rate.
Eurozone growth outlook stable
Growth in the eurozone is projected at 1.3% in 2026, unchanged from Fitch’s December forecast and slightly below last year’s performance.
The agency indicated that higher energy prices present a new challenge for the region. However, underlying growth trends are gradually improving as Germany begins to recover on the back of fiscal easing measures.
Excluding Ireland – where economic growth has been volatile – Fitch expects eurozone growth to pick up by 0.3 percentage points to 1.3%.
China’s growth to moderate
China’s economy is forecast to slow to 4.3% in 2026 from 5% in 2025, reflecting weakening consumer spending and an anticipated moderation in export growth.
Nonetheless, Fitch expects a modest recovery in capital expenditure after 2025 recorded the first annual decline in investment since 1990.
“We have raised the GDP growth forecast for 2026 by 0.2 percentage points since December,” the agency added.
Oil price outlook and risks
Fitch has revised its 2026 average oil price forecast upward to US$70 per barrel for Brent crude, from US$63 previously.
The revision assumes that the Strait of Hormuz remains effectively closed for about a month before prices decline to the mid-US$60 range in the second half of 2026.
Despite the adjustment, the agency said the revision does not materially change its baseline global economic outlook.
However, Fitch warned that a more severe scenario — where oil prices surge to US$100 per barrel and remain elevated — would constitute a major global supply shock.
Under such conditions, global GDP could fall by 0.4% after four quarters, while inflation in Europe and the United States could rise by between 1.2 and 1.5 percentage points.
Trade outlook
The agency also noted that uncertainty surrounding US trade policy persists following the cancellation of certain tariffs by the US Supreme Court.
Nonetheless, Fitch estimates that a temporary 15% tariff would keep the overall US effective tariff rate around 11.3%, broadly consistent with earlier projections.
Despite higher tariffs, global trade expanded in 2025, partly reflecting strong demand for information technology-related imports linked to global semiconductor supply chains.
