Tightening financial conditions sound alarm for world economy
- Russian financial conditions at tightest since 2008
- Global financial conditions at tightest since pandemic height
- Conditions could tighten further if inflation rises further
March 8 (Reuters) – Global financial conditions, perceived as strongly correlated with future growth, are at the tightest in two years, driven by soaring energy prices, sliding stocks and the market fallout from the Ukraine-Russia conflict.
Financial conditions is the umbrella phrase for how metrics such as exchange rates, equity swings and borrowing costs affect the availability of funding in the economy.
How loose or tight conditions are dictate spending, saving and investment plans of businesses and households.
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Goldman Sachs, which compiles the most widely used financial conditions indexes, has in the past shown a 100-basis-point tightening crimps growth by one percentage point in the coming year, with an…
