ISTANBUL
The outlook of most North American sectors is deteriorating due to slowing economic growth, higher unemployment and tight financial conditions, Fitch Ratings said Friday.
“U.S. growth was better than expected in 2023 at 2.4%, but we forecast it to drop to 1.2% in 2024, with only a shallow recovery in 2025,” it said in a report. “Core inflation, while easing, remains above central banks’ 2% targets.”
The rating agency listed key risks as “higher-for-longer” interest rates, financial market volatility, tight funding conditions, decelerating economic growth and pressures on key asset classes such as real estate and structured finance.
“Across multiple sectors, profits are declining and demand is expected to decelerate further as the economy slows in response to the lagged effect of higher interest rates and tightening credit conditions,” it said.
“Rising unemployment and higher cost of living pressures are key headwinds for consumer-based industries and asset classes, also pressuring U.S. banks’ asset quality and operating profits,” it added.
Fitch said Canadian banks have a neutral outlook as they have “largely acclimated” to the higher rate environment, while the US’ life insurance sector outlook is improving as insurers continue to benefit from higher rates.
