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The ten most developed markets globally have had their previous GDP expectations revised upwards, due to more positive numbers than initially expected, according to a new report from Fitch Ratings.
The report highlighted that global shifts in labour productivity and immigration are reshaping growth prospects for developed economies.
This is relevant to insurers, as the long-term outlook could give ideas of which markets show economic strength or weaknesses that could benefit certain investment areas. Fitch has updated its five-year projections for supply-side potential GDP growth for the ten developed economies covered in its Global Economic Outlook. The GDP-weighted average of the ten developed market countries' potential growth projection has been raised to 1.6% a year from 1.4% in the previous report in August 2023.
The report said this “reflects more optimistic projections for the US, revised up to 2.1% from 1.7% in the previous report, Spain, raised to 2.0% from 1.4%, and the UK (1.4% from 1.2%).”
“These changes are partially offset by a sharp downward revision to Germany’s potential growth rate to 0.7% from 1.1%,” it said.
“GDP and labour productivity grew 2.4% and 1.7% a year
on average over 2020 to 2024, respectively."
For others, revisions have been fairly small. Projections for Australia and Switzerland have been revised up by 0.1pp to 2.2% and 1.5%, respectively, while projections for France and Canada have been cut by 0.1pp to 1.1% and 1.4%, respectively. Projections for Japan and Italy are unchanged at 0.5% and 0.7%, respectively.
Fitch said that the US economic performance in the past five years surpassed earlier expectations by a wide margin.
“GDP and labour productivity grew 2.4% and 1.7% a year on average over 2020 to 2024, respectively,” it said, adding that supply was also supported by rapid immigration from 2022 to 2024, which boosted the labour force. However, immigration is now slowing sharply, and Fitch said it expected potential growth to slow to 2.1%.
“Compared to [Q1], the upturn in real GDP in [Q2] reflected a downturn
in imports and an acceleration in consumer spending."
The most recent data in Q2 2025 showed that US real GDP increased at an annual rate of 3.0% in the second quarter of 2025 (April, May, and June), according to the advance estimate released by the US Bureau of Economic Analysis. In the first quarter, real GDP decreased 0.5%.
The Bureau’s report said that “compared to the first quarter, the upturn in real GDP in the second quarter primarily reflected a downturn in imports and an acceleration in consumer spending that were partly offset by a downturn in investment.”
Some had expected more of an economic hit from the volatility of tariffs. This could be only for the short-to-medium term, though. Reports said that US retailers built up their inventories earlier this year in expectation that the Trump administration would hike tariffs on imported products and parts. Many retailers are still selling those non-tariffed products, allowing them to delay price hikes, experts said.
However, it does seem, for now, the predictions of economic pain from the tariffs were out of proportion, enough for GDP to hold steady.
Though labour and immigration are two of the biggest headline-dominating themes in the US right now, and with that being the biggest warning area of Fitch’s report, this could change.
The report emphasised the performance of Germany and Spain as the worst and best among the European countries listed in the ten most developed markets globally.
Germany, the largest economy in the European Union, has not grown in the past five years. “We expect performance to improve as productivity growth recovers towards its 10-year average and public investment picks up,” said Fitch.
Spain, meanwhile, had been the success story of the past few years. From one of the sick men of Europe post-GFC, it has now seen upward revisions that Fitch says, “reflects sustained improvements in labour market performance and a rising share of working-age adults in employment.”
Focusing again on immigration and labour, the report also highlighted the UK’s journey with many parts of upward growth coming from high immigration.
Whether these trends amid changing domestic circumstances will continue remains to be seen.
