Though global credit growth remains at a record low since the financial crisis of 2008, it is likely to stabilize this year, following the slowdown it experienced in 2016. As a result, macro-prudential risk indicators show a reduction in vulnerability to systemic stress in the majority of markets, according to a new report from Fitch Ratings.
The expected stabilization is driven by the credit performance of emerging markets, such as the Middle East and Africa (MEA) and Latin America, which accounted for the reduction in global credit growth from 5.6% in 2015. According to Fitch, global median real credit growth will be 2.5% in 2017, in accord with the 2.8% registered for 2016. The ratings agency does not expect any markets to register credit growth over 15% this year. Roughly 40% of emerging markets and 60% of developed markets are forecast to record positive credit growth of up to 5%.
The slowdown in 2016 was due to a marked reduction in median credit growth of 2.9% in emerging markets, which was below the average of 8.4% from 2010 to 2015. Median credit growth slowed to 2.8% and 2.9% for the MEA and Latin American, respectively, while emerging markets in Europe recorded 1.3%. The highest credit growth was recorded among emerging markets in Asia, at 9.9%. Reflective of the economic recovery, developing markets experienced modest credit growth of 2% for the third consecutive year.
– Adam Fusco, associate editor