Fitch: Oil Price Shock Weighs on Global Growth Outlook, AI Investment Momentum Exceeds Expectations

June 4th – Fitch Ratings said in its latest Global Economic Outlook report that the oil crisis triggered by the U.S.-Iran war is weighing heavily on global growth prospects. As a result, Fitch has downgraded its 2026 global growth forecast by 0.2 percentage points to 2.4%. High inflation is squeezing real wages, crimping consumer spending, and pushing up corporate input costs, leading to downward growth revisions across multiple economies. However, AI-related IT investments are showing stronger momentum than anticipated, acting as a buffer for global economic activity and supporting world trade and Asian exports. The Strait of Hormuz has been closed for 14 weeks, and Fitch expects it to only start reopening in July. The rating agency has raised its 2026 Brent crude oil average price forecast from $70 per barrel (as of March) to $87. While this oil shock is a significant headwind for global growth, Fitch’s baseline outlook is far less severe than during the 1970s oil crisis. The Federal Reserve and Bank of England are projected to keep interest rates unchanged this year, with rate cuts expected in 2027. The European Central Bank (ECB) will likely raise rates by 25 basis points in June, though this tightening trend is set to reverse next year. Source: FXStreet