September 2021: Global Economy In Transition

  • Although Fitch Solutions maintains a relatively bullish outlook on global growth, it believes that as the global economic recovery matures, several important adjustments will occur. 
  • First, as base effects wear off and economies converge back to pre-crisis growth rates, global growth momentum will lose some steam. 
  • High frequency indicators such as purchasing managers’ indices (PMIs), trade data, retail trade and confidence surveys point to a deceleration in economic activity from the elevated and unsustainable levels seen earlier in 2021, with some incoming data even surprising (slightly) to the downside. 
  • Second, there is increasing evidence of a transition towards tighter monetary and fiscal policy as central banks start responding to higher inflation and as governments roll back their income support schemes while looking at tax increases. Emerging markets (EMs) have been the quickest to act in recent months, but a few developed markets (DMs) have increasingly been sending more hawkish policy messages.

(Source: Fitch Solutions)