The growth of credit to the private sector has moderated somewhat, though it seems to have stabilised at double-digit rates. Borrowing for financial transactions – notably in the context of securitisation activities, private equity transactions and leveraged buyouts (LBOs) – has supported strong rates of credit expansion.
Although the downside risks around this forecast are significant, I do not believe the current data signal that we are on the precipice of a so-called double-dip recession. Indeed, many of my business contacts suggest that while growth is very sluggish and uneven, they do not see the precipitous declines that the news headlines suggest.