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Credit Conditions: Global Conditions Have Proven Resilient as Tensions Rise; How Long Can it Last?

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Credit Conditions: Global Conditions Have Proven Resilient as Tensions Rise; How Long Can it Last?

While global credit conditions have so far proven resilient in the face of geopolitical tensions and other risks, the question becomes: Can this hold true as pressures— specifically with regard to trade—intensify?

S&P Global Ratings’ Top Global Risks include the possibility of trade and investment interruption, related primarily to U.S. President Donald Trump’s recent imposition of stiff tariffs against China; increased asset price volatility and the possibility of liquidity reversals; and geopolitical tensions, specifically involving North Korea and Russia.

North America

  • Trade tensions resulting from new U.S. tariffs pose risks to benign credit conditions even though direct impacts for the U.S. could be minimal
  • The stronger near term outlook increases the likelihood that U.S inflation will move up and the Fed moves its policy rate up four times this year
  • Recent developments could break the impasse in NAFTA negotiations and bolster Canada’s growth prospects, mitigating risks of high consumer debt disrupting the economic expansion


  • Credit conditions have continued to benefit from the broad based recovery in Europe, albeit with some Brexit related headwinds in the U.K
  • Global trade tension is rising rapidly and could reduce risk appetite and fuel financial market volatility, while geopolitical risks remain problematic
  • A weak U.S. dollar and strong euro is pressuring European exporter’s competitiveness and making the ECB’s task of generating higher headline inflation more difficult

Latin America

  • Credit conditions in Latin America remain favorable, supported by domestic consumption and an advantageous global economy
  • Although Mexico is exempt from U.S. steel and aluminum tariffs, the increased possibility for additional tariffs, trade skirmishes
  • Elections may bring some volatility to debt markets and perhaps higher funding costs and disrupt otherwise favorable financing conditions


  • Fears of a China-U.S. trade war cloud otherwise positive momentum in the Asia-Pacific's macroeconomic outlook, financial conditions, and sector trends
  • Asia-Pacific growth is mixed -- India (strong, led by investment), Australia (mediocre, held back by soft investment, net exports), while exports, industrial production lift the Tiger economies
  • Despite marginally tighter credit standards in emerging Asia, financing conditions remain favorable