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The MReport Webcast: Monday 8/29/2015

The gross domestic product growth in the Group of Twenty economies has been revised downward for next year, according to a report from Moody's Investors Services released Friday. This revision is mostly attributed to the impact of a more marked slowdown now forecast in China and more prolonged negative effects of low commodity prices on G20 producers than earlier expected.

The report noted that the forecast for 2016 GDP growth in the G20 economies, an international forum for the governments and central bank governors from 20 major economies, has been revised downward from 3.1 percent to 2.8 percent. Moody's also revised China's GDP growth forecast downward 2016 to 6.3 percent from 6.5 percent. The slight downward revision to the US forecast in 2016 is mostly due to negative effects of the stronger dollar and lower oil prices than previously expected.

 

The 2015 Dodd-Frank Act Stress Test process is viewed as more important than the actual results, in that it guides banks to understand capital and credit risk management within their respective institutions. Fitch Ratings examined the Dodd-Frank Act Stress Test process and results, finding that steps taken to gather the data for mid-tier regional banks is a positive development. The stress test process reviewed 60 mid-tier banks only applied the severely adverse scenario which included a 50 percent decline in real estate prices and a nearly 60 percent decline in equity markets over a period of multiple years.

About Author: Jordan Funderburk

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