OREANDA-NEWS. According to Fitch Ratings' latest Macro-Prudential Monitor, global credit rose slightly in 2015 but remains weaker than the post-global financial crisis peak of 2010. Macro-prudential risk indicators (MPI) are likely to remain stable in spite of weaker credit prospects due to credit recovery in developed markets (DM) and the gradual slowdown in emerging markets (EMs) credit.

Fitch estimates that global credit growth increased to an estimated 4.7% in 2015 (slightly above Fitch's November 2015 estimate of 4.6%), above the 4.3% growth in 2014 but below the post-global financial crisis (GFC) peak of 5.6% in 2010.

Credit in the developed world achieved positive growth for the third year in a row in 2015, rising to 2.5%, the fastest rate since 2008. EM Asia and Latin America experienced improvements in median real credit growth levels, reaching 6.1% and 8.8%, respectively, but these increases were still weaker than the 2013 performance and well below the 2010 peaks. MEA, the top EM performer in 2014, decelerated to 7.6% growth, while EM Europe moved into a mild real credit contraction after two years of deceleration.

Fitch Ratings forecasts a deceleration in global credit growth to 3.7% in 2016, driven by the absence of material improvement in global economic activity, persistent weakness in commodity prices, tightening international financing conditions, and continued potential for financial markets volatility. With the exception of EM Asia, all regions are forecast to decelerate. MEA will slow to 5.7%, and EM Europe's credit performance is likely to remain weak. Latin America will decelerate to 6.4%, while developed markets credit growth will moderate to 2.1%.

The number of MPI 3 EM countries remains stable at six. The number of countries in which real private credit growth exceeded 15% in two successive years in 2012 - 2015 (the trigger for an MPI of 2 or above for EMs) equals 22, or 26% of the EM countries included in the analysis, similar to the levels reported in Fitch's previous two reports (March and November 2015).

Almost three-quarters of all countries are now MPI 1, due to slowing EM credit growth and mild recovery in credit/GDP in developed countries (DCs), which has brought this ratio below trend in 79% of DCs. Hong Kong remains the only MPI 3 DC. Although DC credit/GDP has stabilized at around 130%, this is lower than the 135% in 2008, the eve of the GFC.

Bank Viability Rating (VR) changes have led to three Banking System Indicator (BSI) changes: Argentina and Cyprus improved to 'b' from 'ccc'; and Brazil weakened to 'bb' from 'bbb'. Fitch has withdrawn the BSI indicators for Croatia and Tunisia on insufficient coverage.

This report updates the systemic risk indicators Fitch has published since 2005. It aims to identify the build-up of potential stress in banking systems due to a specific set of circumstances: rapid credit growth accompanied by bubbles in housing or equity markets, or appreciated real exchange rate (RER), the latter sometimes associated with asset market bubbles. The focus is therefore on only one potential source of banking system stress.