IMF warns of new financial crisis if interest rates rise

[unhappycamper]

http://www.theguardian.com/business/2015/sep/29/imf-warns-new-financial-crisis-interest-rates-rise

Fund says governments in emerging markets should prepare now for a new credit crunch because of a 10-year corporate borrowing binge

IMF warns of new financial crisis if interest rates rise
Heather Stewart
Tuesday 29 September 2015 13.22 EDT

Rising global interest rates could prompt a new credit crunch in emerging markets, as businesses that have ridden the wave of cheap money to load up on debt are pushed into crisis, the International Monetary Fund has said.

The debts of non-financial firms in emerging market economies quadrupled, from $4tn (£2.6tn) in 2004 to well over $18tn in 2014, according to the IMF’s twice-yearly Global Financial Stability Report.

This borrowing binge has taken business debt as a share of economic output from less than half, in 2004, to almost 75%.
Emerging market debt as a percentage of GDP Emerging market debt as a percentage of GDP

China’s firms have led the spree, but businesses in other countries, including Turkey, Chile and Brazil, have also ramped up their debts — and could prove vulnerable as interest rates rise.