Fitch Cuts Global Growth Forecast to 2.4% as Oil Shock Overshadows AI Boom

Fitch Ratings lowered its forecast for global economic growth in 2026 to 2.4%, citing the escalating oil crisis triggered by growing tensions and military confrontation between the United States and Iran, which has driven energy prices sharply higher and intensified inflationary pressures across major economies.

In its latest Global Economic Outlook released in June, the ratings agency revised its growth forecast downward by 0.2 percentage points from previous projections, warning that higher oil prices are eroding consumer purchasing power, raising business costs, and weakening economic momentum worldwide.

According to Fitch, the surge in energy prices has reduced growth prospects across most advanced economies as households face mounting living expenses and companies grapple with rising operating and production costs. The agency noted that private consumption is increasingly under pressure as real wages are squeezed by renewed inflationary shocks.

Despite these headwinds, Fitch highlighted a powerful counterbalance emerging from the technology sector. A global investment boom in information technology and artificial intelligence is helping cushion the economic impact of higher energy costs, particularly across Asia, where demand for semiconductors and advanced technology products continues to accelerate.

The agency lowered its forecast for U.S. economic growth in 2026 to 1.9%, while growth expectations for the eurozone were cut to 0.9%. In contrast, Fitch upgraded its outlook for China, projecting growth of 4.6%, supported by stronger-than-expected first-quarter performance and resilient export activity despite challenging global conditions.

Several Asian economies also received improved forecasts, most notably South Korea, which is benefiting from robust global demand for semiconductors and technology infrastructure. Fitch noted that electronic chips and advanced computing components have become central drivers of international trade and industrial expansion.

“Higher oil prices are creating clear pressures on the global economy and increasing downside risks to growth,” said Brian Coulton, Fitch’s Chief Economist. “However, the strong surge in spending on information technology and artificial intelligence is providing meaningful support to economic activity in the near term, particularly in economies integrated into global technology supply chains.”

Fitch’s baseline scenario assumes that the Strait of Hormuz remains partially closed for approximately 14 weeks, with reopening efforts beginning in July. Based on this assumption, the agency raised its average forecast for Brent crude prices in 2026 to $87 per barrel, up significantly from the $70 per barrel projected in its March report.

Nevertheless, Fitch believes the current crisis remains less severe than the major oil shocks of the 1970s. The agency emphasized that the global economy has become substantially less dependent on oil over recent decades, with oil consumption as a share of global GDP now roughly half its 1980 level.

Under a more adverse scenario, Fitch assumes average oil prices could rise to $100 per barrel in 2026, accompanied by a 10% decline in global equity markets and tighter credit conditions.

In such a scenario, U.S. economic growth could slow to just 0.8% over the next twelve months, while eurozone growth could fall to 0.3%. Chinese growth would also weaken, declining to 3.4%, according to the agency’s estimates.

Fitch stressed that technology remains the most important engine of global economic activity despite geopolitical disruptions.

Investment in information technology in the United States surged 18% year-on-year during the first quarter of 2026, while global semiconductor sales jumped approximately 80% in March, fueled by expanding demand for artificial intelligence applications, cloud computing infrastructure, and digital transformation projects.

The technology boom is also reshaping global trade flows. U.S. imports of capital goods increased by nearly 30%, while semiconductor exports have strengthened economic performance in South Korea and Taiwan. In China, technology-related products continue to support manufacturing output and export growth.

On the policy front, Fitch expects fiscal expansion in the United States to provide additional support for economic growth this year. Germany is also expected to benefit from increased defense spending, which the agency estimates could add approximately 0.8% cumulatively to GDP over the next three years.

At the same time, the oil-driven inflation shock is likely to complicate monetary policy decisions worldwide. Fitch expects major central banks to adopt a more cautious approach toward interest-rate cuts as inflationary pressures re-emerge.

The agency forecasts that both the U.S. Federal Reserve and the Bank of England will keep interest rates unchanged throughout 2026 before resuming monetary easing in 2027. Meanwhile, the European Central Bank may implement a temporary 25-basis-point rate increase in the near term before reversing course later.

Fitch concluded that the world economy is currently being shaped by two opposing forces: the drag created by rising oil prices and escalating geopolitical tensions, and the unprecedented wave of investment linked to artificial intelligence and advanced technologies.