Fitch: global economic growth will accelerate to 2.6%
International rating agency Fitch expects that global economic growth will increase to 2.6% in 2016 from 2.3% in 2015. This growth rate is partially explained by a smaller decline in Brazil and stabilization in Russia, while the growth of China’s economy continues to slow down.
Fitch sees the main risks to global growth in a faster slowdown in China and a more pronounced effect of the US rate hikes than was previously predicted.
US Federal Reserve tightening, along with a large commercial and public debt in many emerging markets (EMS), which is near all-time highs, creates greater vulnerability to slipping of global economic growth rates.
The growth rate of the US dollar increases the cost of the local currency debt service, reduces the banks’ asset quality, especially in Brazil, Russia and Turkey.
Low commodity prices are the greatest risk for developing sovereign ratings: EMS countries basically remain the net exporters of commodities, with the exception of India and China.
The corporate sectors as oil, gas, metals and mining remain under pressure.
Reduced capital investment in these sectors extends to related industries, including outsourcers and equipment suppliers.
Fitch Ratings notes that the rating prospects are improving in most sectors of developed countries but deteriorate at emerging markets.
“History shows the correlation between the strengthening of the US dollar and the weakening of sovereign credit ratings”, – stated in the review of Fitch.
Oil continues to rise in price
Yesterday oil prices rose on news from Russia about the oil producing countries scheduling to meet in February to discuss a possible decline in production.
According to the auction on January 27, the price of the March contract for Brent crude oil on the ICE exchange in London rose by $ 0.79 (2.4%) to $ 33.89.
March WTI futures on the New York Mercantile Exchange NYMEX rose by $ 0.92 (2.8%) to $ 33.22 per barrel.
Today black gold continues rising. The price of the March contract for Brent crude oil on London’s ICE Futures exchange has increased by $ 0.25 (0.7%) to $ 34.14 per barrel.
Futures for WTI crude oil of March delivery in electronic trading on the New York Mercantile Exchange NYMEX rose by $ 0.39 (1.2%) to $ 33.61 per barrel.