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HomeEconomySlowing growth exacerbates debt pressure, corporate bankruptcy looms: IIF

Slowing growth exacerbates debt pressure, corporate bankruptcy looms: IIF

Rodrigo Campos

NEW YORK (Reuters) – Slowing economic growth is pushing up global debt levels, especially in emerging economies, the Institute of International Finance (IIF) said on Wednesday. market.

The global debt-to-GDP ratio – a widely used measure of borrowers’ ability to service debt – rose to 350% in five The first increase since the quarter, the IIF found. In emerging markets, the share rose by nearly 3.5 percentage points to 252% of GDP, reflecting that economic growth “has been hit by a sharp slowdown.”

“Inflationary pressures have not been sufficient to reduce debt ratios,” IIF’s Emre Tiftik wrote in the report.

The U.S. fell by $5.5 trillion to 300 $1 trillion in the three months to the end of June despite an overall decline in world debt Calculated – First quarterly decline since 2018.

Debt in mature markets fell by $4.9 trillion, slightly more than 201 trillion, while debt in emerging markets fell by a larger margin Much smaller, at $0.6 trillion. The total for developing economies is 99 trillion dollars.

Decline in Total Debt Driven by USD Near

Hits New Year High Against Other Major Currencies and a slowdown in issuance.

A pernicious combination of rising inflation has fueled a surge in energy and food prices in recent months that has led to higher global interest rates, in turn amplifying the risk of a global recession. At the same time, governments have stepped up spending to shore up economies from energy shocks.

“Fears of a rapid slowdown in growth and rising social tensions due to rising energy and food prices may prompt governments to increase borrowing,” IIF economists said in a report, with global debt expected to rise to 2.5 percent by year-end. The ratio of GDP will rise by another 2 percentage points.

(Graph: Global sectoral debt in USD,

Data shows that as of August, the year-to-date government bond issuance has reached 20 % lower than the same period . Government debt fell to 85.$8 trillion but is still rising data show that 35 in the first quarter 252. 70,000 billion percent, highlighting fiscal stimulus for growth triggered by the coronavirus pandemic. (Graphic: Global sectoral debt as a percentage of GDP,

Upward pressure on borrowing costs set at Continue to predict that the Fed will raise the benchmark interest rate by at least 75 basis points next week.

“A significant increase in (corporate) bankruptcies is likely to increase as borrowing costs rise, which would allow the central bank to achieve a soft landing without adversely affecting the job market ,” said the IIF.

Sovereign investment-grade issuers have seen yield growth far lower than in riskier countries. IIF data shows 35 countries 20

The IMF board could approve a new “food shock window,” allowing the fund to provide expanded emergency financing, IMF Managing Director Kristalina Georgieva said on Tuesday.



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