Emerging market and developing economies (EMDEs) pushed their borrowing to a record $55tn (£42tn) last year, according to the World Bank, marking an eight-year surge that is the “largest, fastest and most broad-based in nearly five decades”.
While much of the growth in debt levels was driven by China, he Washington-based development agency said most of the 100 countries covered by its analysis were affected, following an increased dependency on borrowing by both private and public sector organisations.
The analysis in Global Waves of Debt, a study of the four significant episodes of debt accumulation since 1970, found the debt-to-GDP ratio of developing countries had climbed 54 percentage points to 168% since the debt buildup began in 2010.
The total includes all forms of debt – consumer, business and government – and illustrates the pressure on all parts of the economy to honour debt payments, mostly to banks and international investment funds.
On average, the debt-to-GDP ratio of the 100 countries affected increased by seven percentage points each year – nearly three times as fast as it did during the Latin America debt crisis of the 1980s.
Ceyla Pazarbaşioğlu, the World Bank’s vice-president for equitable growth, finance and institutions, said: “History shows that large debt surges often coincide with financial crises in developing countries, at great cost to the population.
Read More: https://www.theguardian.com/business/2019/dec/19/debt-in-developing-economies-rises-to-record-55tn