$3 trillion corporate credit crunch looms as debtors face day of reckoning, says IMF
Just to prove that rural England is part of a global economy this article made my blood run cold just when I thought the “10s” was to become a decade of recovery. It tells us:
Governments and central banks risk tipping the world into a fresh financial crisis, the International Monetary Fund has warned, as it called time on a corporate debt binge in the developing world.
Emerging market companies have “over-borrowed” by $3 trillion in the last decade, reflecting a quadrupling of private sector debt between 2004 and 2014, found the IMF’s Global Financial Stability Report.
This dangerous over-leveraging now threatens to unleash a wave of defaults that will imperil an already weak global economy, said stark findings from the IMF’s twice yearly report.
The Fund warned there was no margin for error for policymakers navigating these hazardous risks.
The slightest miscalculation, they said, could collapse into a “failed normalisation” of interest rates and market conditions, wiping 3pc from the world’s economic output over the next two years.