The Tightening Of Credit Standards – Is The IMF Right?

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The International Monetary Fund (IMF) revised down its estimates for global growth on Monday, warning that the expansion seen in recent years is losing momentum and China’s economy is shaking global markets.

“The IMF does not have a great track record when it comes to forecasting the economy but, on this occasion, we agree with their assessment. Our fractal based model of the economy shows that the U.S. and Europe in particular are just at the start of a long and perhaps dramatic economic decline. Indeed, our model has been giving us the message for some time that the British pound is at risk of a severe decline versus the Euro. That doesn’t have to coincide with the U.K. crashing out of Europe with no deal, but current logic would suggest that it will. 


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China, on the other hand, has been declining for years in terms of social mood, and the latest economic figures merely confirm that. However, at this moment in time, we see little evidence of a financial crisis emerging in China. Conventional analysis points to the tightening of credit standards by authorities as being one of the causes of the slowdown in China. The way we look at causality, it is the negative trend in social mood which started in 2015 that has caused the authorities to tighten credit standards.” 

About Murray Gunn

Murray Gunn is Head of Research for Elliott Wave International’s Global Market Perspective, a monthly summary of the firm’s 25 analysts’ views on every major freely-traded market in the world. After earning his Master of Arts (Honors) degree in Economics from the University of Dundee in Scotland in 1991, Gunn went into fund management. He quickly realized that textbook descriptions don’t apply to real-world markets, which in turn led him to technical analysis and the Elliott Wave Principle. He worked as a fund manager in global bonds, currencies and stocks, including long posts at Standard Life Investments and a five-year stint in the Middle East at the Abu Dhabi Investment Authority. Gunn then joined HSBC as Head of Technical Analysis. He has served on the board of the Society of Technical Analysts and delivered lectures on the Elliott Wave Principle to students at The London School of Economics, Queen Mary University and Kings College London. You can read Gunn’s commentary in Elliott Wave International’s Global Market Perspective, Interest Rates and Currency Pro Services, and on

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