Emerging markets debt-to-GDP ratio hit record highs again despite a $6.4 trillion decline in global debt to $290 trillion in the third quarter on the back of a stronger dollar and slowing sales securities, according to a report by the Institute of International Finance (IIF).
Budget deficits and slower economic growth have pushed the debt-to-GDP ratio in developing economies to 254%, which equals a record high for the first quarter of 2021, the IIF said in its latest Global Debt Monitor, released on Tuesday. fair (22).
Overall emerging markets debt, however, fell to $96.2 trillion from $98.7 trillion in the previous quarter. Meanwhile, the global debt-to-GDP ratio fell for the sixth consecutive quarter to 343% of GDP.
“The global sovereign interest bill is set to rise rapidly, particularly in sub-Saharan Africa but also in emerging Europe.” wrote Emre Tiftik, director of sustainability research at the IIF, in the report.
Officials and ratings agencies have warned that debt pressures on fragile developing economies are far from over and more defaults are likely.
The higher cost of debt service could particularly hurt countries most exposed to the effects of climate change, the IIF said.
The global banking trade group said in its quarterly report that despite a reduction in dependence on dollar debt in recent years, it remains at high levels in Latin America and Africa, “leaving many countries heavily exposed to swings in currency markets. exchange”.
Outside the sovereign sphere, smaller companies and low-income households have been hardest hit by the rising cost of borrowing.
Source: CNN Brasil
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