📉 Fitch Warns US Equity Shock Could Trigger Global Recession

• Downside Risks & Global Impact Fitch Ratings warns that a severe AI-related equity price shock (-35% in US share prices over 6 months) combined with reduced capital spending could cause a US recession, slowing global GDP growth below 1.0% in 2027—a state of global stagnation. • Key Economic Metrics (Adverse Scenario) US GDP Growth (2027): -0.6% (falling to -1.5% YoY in 2Q27) US Private Capex: Drop exceeding 6% Federal Reserve Policy Response: Up to 325bp rate cut China & Eurozone GDP Hit: -0.8pp Trade-reliant Nations Hit: Canada and Mexico to experience >2% GDP drop • Implications for Sri Lanka A sharp economic downturn in major markets poses indirect downside risks to Sri Lanka's key export-earning sectors like apparel & textiles, which heavily depend on US consumer demand for export revenue, employment stability, and foreign currency inflows.