Fitch Raises Its 2026 Global Growth Forecast to 2.6 Percent and Lifts 2027 Brent
Fitch Ratings raised its forecast for global growth this year by 0.2 points to 2.6 percent and said it expects the Federal Reserve to raise rates again in December and hold them at 4.25 percent through next year, in its Global Economic Outlook published on Tuesday. In a separate commentary the same day it raised its 2027 Brent assumption to 70 dollars a barrel from 65 dollars, held the 2026 assumption at 87 dollars and increased its European gas assumptions for 2026 and 2027, without publishing the levels.
Growth is holding up, financing conditions are not
The agency raised its United States forecast for both this year and next by 0.2 points to 2.1 percent, saying consumption has defied the slowdown in real household income and the build out of artificial intelligence capacity shows no sign of slowing. It edged up euro area forecasts, noting German output grew 1 percent year on year in the second quarter after three years of stagnation, and made a large upward revision to Korea as global spending on information technology intensifies, which it said is also supporting Mexico and Japan. China was cut 0.1 points to 4.5 percent on falling fixed asset investment and weak consumer spending, against what the agency called stellar export growth.
| Item | Figure |
|---|---|
| Global growth 2026 | 2.6%, raised 0.2 points |
| United States 2026 and 2027 | 2.1% each, both raised 0.2 points |
| China 2026 | 4.5%, cut 0.1 points |
| Federal Reserve | One more increase in December, then 4.25% through 2027 |
| End 2027 policy rate against June | 125 basis points higher |
| Brent 2026 | 87 dollars a barrel, unchanged |
| Brent 2027 | 70 dollars a barrel, raised from 65 |
| Upside and downside cases | 85 dollars a barrel upside, 55 dollars downside on a durable peace in the first quarter of 2027 |
Fitch Ratings, public commentary on the Global Economic Outlook September 2026, and its oil and European gas price assumptions, both 22 September 2026.
Real rates and bond yields
That path for policy would imply rates at the end of 2027 a full 125 basis points above the June forecast, despite a slight downward revision to the United States inflation forecast as wage growth has slowed. Fitch said the prospect of higher real policy rates over the next two years has been a key driver of rising global bond yields while supply and demand factors may also have played a part, that the rise in real yields has occurred across the maturity spectrum, and that some measures of term premia have risen, and that this is taking place as the footprint of central banks in bond markets continues to diminish. It expects the European Central Bank to raise rates once more in October, but sees this year’s increases reversed next year as oil falls to 70 dollars a barrel in its base case, and notes the Bank of Japan has accelerated tightening. Sovereigns with weaker public finances have generally underperformed the wider market.
The oil assumptions behind that base case
On the energy side the agency said 10 million barrels a day continue to move through the Strait of Hormuz by oil shuttling, which it considers sustainable even without a peace deal. Together with the two bypass pipelines in Saudi Arabia and the United Arab Emirates, that supports crude flows at 90 percent of pre war levels. In August, output in the United Arab Emirates was 111 percent of the pre war level, Saudi supply was at 75 percent according to OPEC, and Kuwait and Iraq, which have no alternative export route, had restored 76 percent and 87 percent. Prices had fallen close to 70 dollars a barrel in mid June after a memorandum of understanding between the United States and Iran, and Hormuz flows recovered to 75 percent of pre war levels by the end of that month, but renewed hostilities and the shutdown of Saudi Arabia’s East West pipeline lifted Brent to about 100 dollars a barrel on average so far in September. Fitch expects prices to fall once flows through that pipeline resume. Fitch expects the market to move into oversupply in the fourth quarter of this year and to be materially oversupplied in 2027 whether or not a peace deal is reached, with supply outside the Middle East rising 1.5 million barrels a day this year and a further 1 million next year. Demand destruction of about 5 million barrels a day in the second quarter helped balance the market, with China the largest single decline at 1.5 million, and observed inventories fell to 7.8 billion barrels in August from a peak of 8.2 billion in early 2026, in line with the 400 million barrel release announced by the International Energy Agency. Its assumption is that the conflict is resolved during the first quarter of 2027, a timing it describes as uncertain.
Why it matters: “We have seen a big shift in the outlook for real policy interest rates,” said Brian Coulton, the agency’s chief economist. For the Gulf both halves of this land at once. Most of the region pegs to the dollar and therefore imports a Federal Reserve that hikes in December and then sits at 4.25 percent through 2027, while Kuwait pegs the dinar to a basket of currencies, which leaves its central bank a degree of room. On the other side the 2027 assumption of 70 dollars, which Fitch raised from 65 dollars to reflect a geopolitical risk premium, sits 17 dollars below the assumption for this year, on our calculation.
Outlook: the agency sets an upside case of prices averaging 85 dollars a barrel and a downside case of 55 dollars if a durable peace agreement is reached in the first quarter of 2027 and the geopolitical risk premium falls sharply, a spread of 30 dollars between the two cases, on our calculation. It also flags the engine of its own upgrade as a risk, warning that with some equity valuation measures looking elevated there are risks from a correction in equity markets and a pull back in artificial intelligence capital spending.
Sources: Fitch Ratings, OPEC, International Energy Agency.
