Fitch Ratings (Fitch) released its September 2026 Global Economic Outlook, raising its world economic growth forecast on surprising resilience in major economies. While raising the outlook for 2026, it remains below the level of growth seen in 2025. The world economy still faces several risks, including geopolitical tensions, trade disruptions and rising inflationary pressures. Fitch has warned that interest rates are likely to stay higher for longer.

Fitch now expects global gross domestic product for its federal funds rate to 3.75%-4.00% yesterday. This marked the Fed’s first rate hike since 2023 when it reached 5.25%-5.50%.

The ratings agency expects the U.S. Federal Reserve Board to raise interest rates again in 2026 before
holding them steady 4.00%-4.25% through 2027, as central banks work to keep energy-driven inflation from becoming more persistent. It also expects the European Central Bank to hike once more in 2026.

The economic growth forecast for China  was trimmed to 4.5% in 2026, pointing to falling fixed-asset investment and weak consumer spending, even as the country's exports remain strong.

While the global picture brightened, Fitch continues to flag Canada as one of the economies most exposed to the ongoing trade tensions. Fitch believes elevated tariffs may weigh on exports, business investment and consumer sentiment.

For Canada, a stronger global economic backdrop is good news for trade partners and markets broadly. However, higher-for-longer interest rates and unresolved trade tensions with the U.S. could mean Canada's own recovery may lag behind the global upswing. Still, Canada’s economy has demonstrated its resiliency despite these significant headwinds.

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