S&P Global, a market intelligence company, predicts that banks will suffer credit losses of nearly $1 trillion this year in spite of an improved macroeconomic environment.
The firm’s Global Credit Outlook report for 2025 says that global credit conditions will remain favorable in 2025, as the major economies engineer soft landings while central banks shift to more lenient monetary policy.
S&P Global expects that banks around the world will experience more bad and delinquent debts this year.
We forecast that global credit losses in 2025 will rise by about 7% to 850 billion dollars – this is within the parameters of our baseline case, based on current ratings for banks.
Market insights says that the number could rise if one or more headwinds affect global credit conditions this year.
The improvement of global credit will follow a path that is narrow and dotted with risks. The prospect of inflation resurging, political polarization, and slowing economic growth could all lead to prolonged bouts of volatility .”
S&P Global says that uncertainty is also prevalent in the US and there could be a worsening of global credit conditions due to possible changes in policies, including increased tariffs.
The firm warns that President-elect Donald Trump’s proposed economic plan could lead to a resurgence in inflation and force the Fed into abandoning its cycle of rate cuts. It also notes the threat of credit quality.
Credit conditions in North America are likely to stay favorable as the US economy enters a period of soft landing. The US is undergoing a political transition. However, if materially higher taxes are imposed, they could spark inflation, forcing the Federal Reserve’s monetary policy to be reversed or even halted.
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The content of this post, $850,000,000,000 Credit Losses to Hit Banks in This Year as Uncertainty Rules: S&P Global Forecast can be changed as new information becomes available.
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