Fitch Ratings Global Outlook for 2024: An Overview
Expert view / 3 January, 2024
The Fitch Ratings' Global Outlook for 2024 is driven by four key themes:
- sustained higher interest rates
- a sharp US slowdown
- global asset-quality deterioration
- a heightened macro-credit risk environment.
The effects of tighter borrowing conditions are yet to fully impact the global economy and credit, with lower-rated issuers and pro-cyclical sectors, particularly in emerging markets, at greater risk.
Outlooks are mixed, with North American and Middle East & North Africa sovereigns, US banks, and EMEA real estate deteriorating. On the other hand, global aerospace & defense, emerging market APAC banks, global reinsurance, and Latin American real estate show improvement.
Sovereigns are under pressure from weaker growth and persistent fiscal pressures, with growing spending, debt, and interest service burdens.
The US economy is predicted to slowdown significantly in 2024 due to a loosening labor market and weak credit and investment. China's ongoing property crisis will continue to affect consumption and investment throughout 2024. Europe faces stagnation and weakening global trade.
Emerging markets, excluding Europe and Asia-Pacific, will face challenges from weak growth and tight external financing conditions. Latin America will struggle economically, while the Middle East and North Africa face geopolitical risks.
Global corporates are expected to have stable to improving credit metrics, with a divergence between investment-grade and sub-investment-grade ratings performance. Financial institutions will adjust to higher rates for longer, with banks facing challenges in their business models. The insurance sector remains resilient in the face of elevated rates.
Any trend significantly reducing growth, increasing inflation and interest rates beyond the base case in 2024 would negatively impact public finance and infrastructure sectors. US public finance sectors are expected to be mostly stable, while international public finance sectors have a balanced outlook. Global infrastructure sectors will have subdued performance amid softer economic conditions.
You can access the full 2024 Global Outlook report by visiting the Fitch Ratings website.