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- Rising debt in emerging markets could push back Covid recovery
Rising debt in emerging markets could push back Covid recovery
CNBC reports that an economist said that swelling debt levels may cause emerging markets to fall further behind developed markets in the economic recovery from the Covid-19 pandemic.
“With the pandemic, debt rose across all types ... the big increase of course was in government debt — and no surprise because of such a need to provide fiscal stimulus at the same time the tax revenues were down much across the board around the world,” Steve Cochrane, chief Asia-Pacific economist at Moody’s Analytics, told.
“The real impact, however, I think is sort of an increasing divide between developed economies and emerging markets. The debt loads rose most in emerging markets and they may have the most difficulty in terms of taking care of this debt going forward,” he added.
Total global debt across government, corporate, household and financial sectors rose by a record $24 trillion in 2020, an analysis by Moody’s Analytics showed. The increase took global debt to a new-high of 366% of gross domestic product, the consultancy said in a report.
Overall debt in emerging markets more than doubled over the past decade and now accounts for one-third of outstanding debt globally, according to the report.
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