Saxo Bank: For oil-dependent countries, time is running out fast to implement structural reforms

Baku. 19 January. REPORT.AZ/ For oil-dependent countries, time is running out fast to implement structural reforms before the next crisis.

The Head of Macro analysis department at Saxo Bank Christopher Dembik told Report.

"One of your favorite leading indicators at Saxo Bank is the credit impulse which tracks the net flow of new credit issued from the private sector as percentage of GDP. It is the second most important derivative of economic growth. Our in-house model has been in contraction since last Spring which means that we should expect a global slowdown in the coming months", Dembik said. 

"What worries us the most is the evolution of credit impulse in China. The more data we get, the deeper the contraction in credit impulse is. It is not completely surprising since the Chinese authorities want to start deleveraging. However, since China represents around 1/3 of global growth impulse, China’s slowdown will of course have a global negative impact. It is always hard to know when a recession will start but, in most parts of the world, we have probably already reached the peak of the economic cycle. In other words, we should get used to more negative data, in particular in China. For oil-dependent countries, time is running out fast to implement structural reforms before the next crisis. Most of these countries should have followed the good example of Saudi Arabia that has not waited too long before starting economic diversification", department head added.