The International Monetary Fund (IMF) says when the US Federal Reserve and other central banks in major economies begin to increase interest rates, it will lead to a mass failure of businesses in emerging markets.
In the IMF’s Global Financial Stability report, published Tuesday, the group says because of the low interest rates from the Fed and other world markets, emerging market economies more than quadrupled their debt load in the last 10 years. In 2004, the debt for emerging markets was $4 billion. In 2014, the level is $18 billion.
“As advanced economies normalize monetary policy, emerging markets should prepare for an increase in corporate failures and, where needed, reform corporate insolvency regimes,” IMF economists wrote in the report.
“In particular, policymakers should monitor vulnerable and systemically important firms, as well as banks and other sectors closely linked to them,” Gaston Gelos, Chief of the Global Financial Stability Analysis Division at the IMF, said in an IMF press release. “Such enhanced monitoring requires that the collection of data on corporate sector finances, including foreign-currency exposures, be improved.”
The report comes on the heels of Brazil’s central bank reporting their nation’s recession is “far worse” than they had projected. The six largest economies in Latin America have all fallen to a growth rate around 1% this year, a decline in some nations of more than 5% in the last five years.
The post IMF Warns of Coming Emerging Market Company Failures appeared first on Trunews..
from Trunews. http://ift.tt/1JCofY2
via IFTTT
No comments:
Post a Comment