Monday, August 6 2012 15:31
Fitch forecasts high lending rates in Armenia and another four counties
ArmInfo. Fitch Ratings forecasts the highest growth of lending rates in 5 countries for 2012: Armenia 21.3%, Lesotho - 19%, China - 18%, Azerbaijan - 15.7% and Zambia - 15.4%.
Fitch Ratings says in its latest Macro-prudential Risk Monitor that global real lending growth slowed to 4% in 2011 and is forecast to fall further this year.
"Fitch forecasts global bank credit to weaken to just 3% in real terms this year. Nonetheless, a handful of emerging markets have been experiencing a combination of rapid credit growth and asset price inflation that has been associated with bubbles in the past," says Richard Fox, Senior Director in Fitch's Sovereign group.
The lending to GDP ratio has stabilized over the last years: 160% in the developed countries and nearly 50% in developing countries.
Last year's 4% real credit growth and this year's forecast 3% are well below a pace that would cause renewed concerns about overlending.
The recovery of credit growth seen in 2010 to 5% has not been sustained. Amongst EM regions, growth is forecast to remain fastest in Asia at 9%, but this is down from 11% in 2011. Credit growth is forecast to slow particularly sharply in Latin America, where growth is expected to halve to 5% this year. Only Brazil is likely to buck the trend amongst the major Latin American economies with forecast higher credit growth in 2012. Growth in the Middle East and Africa is forecast to slow to a similar 5%, though some GCC countries may see a pick up. Emerging Europe continues to experience the slowest EM credit growth with barely 3% real growth expected this year.
Colombia and Lebanon drop out of the MPI 3 category due to data revisions. Countries that remain MPI 3 based on past triggers are Argentina, China, Cyprus, Hong Kong, Indonesia, Sri Lanka and Turkey.
The governments of the countries with overlending features need to toughen the monetary and lending policy to prevent shakes, Fitch experts say.
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