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There's Some Bad Loans on the Rise

February 23, 2017

Euromonitor on the global issues impacting our industry.

Forward-thinkers take note—a rise in bad loans make it highly probable there will be a global banking crisis by 2020. For those who can't see quite that far, Euromonitor International takes the guesswork out of predictions with its new white paper, “Global Economies and Consumers in 2017.”
 

Euromonitor analysts predict 2017 will be marked by slowing growth in consumer expenditure in developed markets. With many of these countries struggling to raise productivity, weighed down by debt and an aging population, stagnation represents a threat. The Eurozone will continue to see anaemic growth, with a slowdown in all major economies.

 
“In emerging and developing markets, real consumer spending growth is expected to strengthen in 2017, driven by markets such as China, India and the ASEAN. Brazil and Russia are expected to return to growth next year, albeit weak growth," said Sarah Boumphrey, global lead of economies and consumers at Euromonitor International. "India should continue to perform well, with the strongest growth in all major markets, although downside risks stem from demonetization.”

 
Among the trends to watch in 2017:
  • The US elections result unfolds uncertainty with global spillovers. The main obstacles include increases in trade tariffs and immigration restrictions, which could cause a downturn in the US economy, with GDP growth falling to 0.9% in 2017.
  • Political risks threaten to obstruct economic growth in Europe. Right-wing parties gain ground across Europe, adding up to significant political uncertainty, while continued concern surrounding Brexit is estimated to lower UK demand and add to vulnerability of European economies.
  • The over-indebted Chinese corporate sector will pose increasing pressure on the Chinese economy. High credit growth is anticipated to carry on in China. Bad loans being a particular cause for concern, add to a high probability of the aforementioned banking crisis.
 

And for or more details on emerging markets, check out "Cities of the Future: Emerging Market Champions,” which highlights the most developed cities in emerging markets alongside their business opportunities and challenges.