Global economic growth should be steady this year, provided the current oil price shock is not prolonged, Fitch Ratings has disclosed in its latest March 2026 Global Economic Outlook (GEO).

The world economy has held up well despite a succession of geopolitical and US policy shocks. World growth was 2.7% last year, close to its long-run average. Assuming that the recent jump in oil prices is relatively short-lived, the UK firm anticipates only a slight slowdown in 2026 to 2.6%, revised from 2.4% in December’s GEO.

Surging AI-related investment, large fiscal deficits in the US and China, and a boost to US consumption from equity market gains helped offset the impact of higher US tariffs last year.

US Consumption to Slow

“We expect US consumption to slow in 2026 as labour market weakness weighs on household income, but the US fiscal deficit is widening again. We forecast US 2026 GDP [Gross Domestic Product] growth at 2.2%, revised up from 2% in our January forecast update, and unchanged from last year”, Fitch said.

Eurozone Growth to Remian Unchanged

“We project eurozone growth at 1.3%, unchanged from December, and slightly below last year. Higher energy prices are a new headwind, but underlying growth trends are improving as Germany starts to recover on fiscal easing. For the eurozone stripping out Ireland (where growth has been volatile), we expect a 0.3pp [percentage points] pick-up to 1.3%”, it pointed out.

China’s Economy to Slow

China is forecast to slow to 4.3% from 5% in 2025 as consumer spending growth is weakening and export growth is expected to cool.

However, Fitch anticipates a mild recovery in capex, after 2025 saw the first annual decline in investment since 1990, adding, “We have raised the GDP growth forecast for 2026 by 0.2pp since December.

“We raised our 2026 annual average oil price forecast to US$70 a barrel from US$63 (Brent). This assumes that the Strait of Hormuz remains effectively closed for about a month, but oil prices then fall to the mid-US$60s by 2H26 [second-half]. This revision has not had a major impact on our base-case economic forecasts”, it stressed.

But an adverse scenario – in which oil prices rise to US$100/barrel and remain there – would be a significant global supply shock, reducing world GDP by 0.4% after four quarters and adding 1.2-1.5 percentage points to inflation in Europe and the US.

The US Supreme Court’s cancellation of IEEPA tariffs has reopened uncertainty about US trade policy, but Fitch said a temporary S122 tariff at 15% would leave the overall US Effective Tariff Rate (ETR) at 11.3%, close to our December assumption.

World trade picked up in 2025 despite the jump in the US ETR. This partly reflected the high import intensity of IT investment given the geographic concentration of global semiconductor manufacturing.