In its latest quarterly Global Economic Outlook (GEO) Fitch Ratings forecasts the economic growth of major advanced economies (MAE) to slow to 1.3% in 2011 and remain weak at 1.2% in 2012, followed by only a modest acceleration to 1.9% in 2013.

Compared with the previous GEO in October, Fitch has revised down its GDP forecasts over the entire forecast horizon to 2013. The agency forecasts global growth, based on market exchange rates, at 2.4% for 2012 and 3.0% in 2013, compared with 2.7% and 3.1% previously.

"Fitch expects growth in the eurozone to weaken further to just 0.4% in 2012 owing to increased fiscal austerity measures and deteriorating financial market conditions feeding into tighter credit conditions for the broader economy," says Gergely Kiss, Director in Fitch's Sovereign team.

Mildly negative quarterly growth rates are likely over the next quarters in the eurozone (EZ) and, among its four largest members, Fitch expects only Italian GDP to contract over 2012 as a whole, by 0.5%.

"However, the outright contraction of the eurozone economy over 2012 is now a one-in-three probability," adds Kiss

The recovery in the US will remain lacklustre in the short run with stronger growth momentum expected from H212 onwards, weighed down by the continued drag from the housing market as well as fiscal tightening equivalent to around 1% of GDP. In line with weak GDP growth in the EZ, the economic outlook has also weakened in the UK, where Fitch has revised down its GDP growth forecasts again to just 0.7% in 2012 and 2.0% in 2013.