Although there are increasing concerns about household debt levels in Canada, global credit growth slowed to its lowest level since the financial crisis last year, Fitch Ratings reports.
Real credit growth slowed to 2.9% in 2016, down from 5.5% in 2015, the credit-rating agency reports. A notable deceleration in emerging markets drove the slowdown, as the growth rate in emerging markets declined to 3.8% vs average annual growth of 8.5% in the 2010-15 period. At the same time, developed markets saw continued modest credit growth of 2.6%.
Credit growth slowed to just 1.7% in the Middle East and Africa and to 4% in Latin America while emerging Europe saw continued weak growth of 1.7%, Fitch reports.
Emerging Asia saw credit growth of 10.3%, but Fitch says that this was still weaker than the region’s performance in the immediate aftermath of the global financial crisis. Furthermore, the credit-rating agency reveals that growth rates are in single digits for half of the countries in the region.
One of the consequences of the slowdown in credit growth is that systemic risks in the banking sector are declining too. The proportion of countries that Fitch rates as having “low vulnerability to systemic risk”, is now at a record high of 78%, it says.