The 2025 outlook for global credit has worsened over the course of 1H25 as increased tariffs, US policy uncertainty and elevated geopolitical risk has created a more challenging macroeconomic environment than Fitch Ratings had originally expected. An additional 56 of 288 sector and asset performance outlooks – assessments of our operational and business condition expectations for 2025 – have been changed to ‘deteriorating’ from ‘neutral’ at mid-year.
Four key themes remain key to watch that could alter our base case expectations in the second half. These include trade and tariffs, inflation and interest rates, geopolitics, and /economic policy. A much more aggressive US protectionist agenda, including tariff rates far in excess of our original assumptions set at end-2024, is the key factor driving the negative revisions to our macro-economic outlook up to mid-year 2025. As such, the end-point for tariffs remains a major watch item for global credit. Should the US average effective tariff rate settle much higher or lower than our current base case, it would be likely to prompt a revision to our global economic base case.
We expect global real GDP growth to decelerate to 2.2% in 2025, down from 2.9% in 2024 – a 0.4pp decline from our 2025 forecast set at end-2024. A more marked economic deceleration has been reflected in other sector forecasts, with non-financial corporates’ performance indicator forecasts also being cut in 1H25.
Ratings risk is largely yet to materialize despite the deterioration in our base case sector forecasts. There has been no significant ratings migration nor any dramatic rise in Negative Rating Outlooks to signal an increased probability of downgrades.
Source: Fitch Ratings
