Global Growth Outlook Darkens on Rate Hikes: Chart of the Day



As central banks tighten monetary policies, the credit impulse is likely to turn negative, slowing global economic growth.


Research firm Macrobond created a credit impulse measure for the three largest economies: US, China, and the eurozone, and set it ahead of the world Sentix indicator, a measure of global sentiment, by eight months. Based on the correlation, the Sentix indicator is likely to significantly decline in the months ahead, with negative implications for global economic growth.



The credit impulse represents the flow of new credit from the private sector as a percentage of GDP and is a large driver of economic growth. As central banks tighten policies, so the credit impulse is likely to turn negative, dragging on growth.



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Kevin Hamlin

Kevin Hamlin is a financial journalist with more than 40 years of experience covering Asia. Before joining Asia Financial, Kevin worked for Bloomberg News, spending 12 years as Senior China Economy Reporter in Beijing. Prior to that, he was Asia Bureau Chief of Institutional Investor for ten years.

Richa Gandhi

Richa Gandhi is a Data Journalist with Asia Financial News Group and has a special interest in data analytics. She is a post graduate in Statistics from Pune University in India. You can reach out to her on Twitter at @RichaG18.