World Bank warns emerging economies need to grow 'much faster' to repay debt
economictimes.indiatimes.comWorld Bank warned that high borrowing costs have «changed dramatically» the need for developing nations to boost sluggish economic growth.
The multilateral lender's latest warning comes as international bond sales from emerging market governments hit an all-time record of $47 billion in January, led by less risky emerging economies such as Saudi Arabia, Mexico and Romania.
However, some riskier issuers have started to tap markets at higher rates. Kenya recently paid more than 10% on a new international bond — the threshold above which experts often consider borrowing unaffordable.
«When it comes to borrowing, the story has changed dramatically. You need to grow much faster,» Ayhan Kose, deputy chief economist of the World Bank, told Reuters in an interview in London on Tuesday, though he declined to comment on individual countries.
«If I had a mortgage with a 10% interest rate, I would be worried,» he added.
Kose added that faster growth, especially a real growth rate higher than the real cost of borrowing, could prove elusive.
The World Bank warned in its Global Economic Prospects report, published in January, that the global economy was set for the weakest half-decade performance in 30 years during 2020-2024, even if recession is avoided. Global growth is expected to slow for a third consecutive year to 2.4%, before ticking up to 2.7% in 2025.
Those rates are still well below the 3.1% average of the 2010s, the report showed.
The growth slowdown is
