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Italy And Spain Lead Positive Credit Impulse Swing After Large Drags [2/2]

MACRO ANALYSIS
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  • We touched upon the huge swings in credit impulse calculations based on new credit issuance after ECB President Lagarde talked on credit growth at the ECB press conference two weeks ago.
  • The extra month’s data shows a continuation of the theme of a less negative drag from growth on a 12mth/12mth basis at -1.4% GDP whilst a shorter-term measure has switched from neutral in recent months to a small boost worth +0.7% GDP.
  • Looking by country and as noted in part 1, Italian and Spanish lending to non-financial corporations is lagging its German and French counterparts quite notably as of June.
  • However, focusing on the 12mth/12mth metrics, the relative changes in net new credit issuance paint a different picture with Italy and Spain no longer seeing large drags from private credit growth.
  • It’s in contrast to heavy drags in Germany (-2.6% GDP) and France (-3.0% GDP), with the former likely helping weigh on what’s been particularly soft German GDP growth of just -0.2% Y/Y as of Q1.
  • The differences stem from the large moderation from strong growth rates in previous years for Germany and France whilst Italy and Spain saw a notably weaker starting point for credit growth.

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  • We touched upon the huge swings in credit impulse calculations based on new credit issuance after ECB President Lagarde talked on credit growth at the ECB press conference two weeks ago.
  • The extra month’s data shows a continuation of the theme of a less negative drag from growth on a 12mth/12mth basis at -1.4% GDP whilst a shorter-term measure has switched from neutral in recent months to a small boost worth +0.7% GDP.
  • Looking by country and as noted in part 1, Italian and Spanish lending to non-financial corporations is lagging its German and French counterparts quite notably as of June.
  • However, focusing on the 12mth/12mth metrics, the relative changes in net new credit issuance paint a different picture with Italy and Spain no longer seeing large drags from private credit growth.
  • It’s in contrast to heavy drags in Germany (-2.6% GDP) and France (-3.0% GDP), with the former likely helping weigh on what’s been particularly soft German GDP growth of just -0.2% Y/Y as of Q1.
  • The differences stem from the large moderation from strong growth rates in previous years for Germany and France whilst Italy and Spain saw a notably weaker starting point for credit growth.