IMF sounds alert over debts in largest economies
WASHINGTON: For the first time in years the International Monetary Fund is optimistic about global economic growth. But it sees a new problem: mounting debt in the world’s largest countries.
“Debt levels are increasing in G20 economies,” Tobias Adrian, who heads the IMF’S monetary and capital markets division, said Wednesday.
Among private businesses in those countries, leverage is higher than before the financial crisis. And the weight of debt service has also jumped in several top economies, he noted.
With central banks in the US and Europe expected to tighten monetary conditions, he said, “This poses greater risks over time from sharp increases in interest rates.”
Introducing the IMF’S newest assessment of risk in the world’s financial system, Adrian noted that the extremely low interest rates of the past several years have allowed countries to borrow easily to finance their rebound from recessions.
And recovery is not yet complete, he noted, saying low rates are still needed.