Protectionism looms on India Inc balance sheets
The International Monetary Fund (IMF) on Wednesday cautioned that corporate balance sheets would be hit hardest in India, besides China and South Africa, in case protectionism rises in the world. It also warned against bad debt of banks in India. “In a scenario of rising protectionism,... the greatest deterioration in corporate balance sheets would occur in China, India and South Africa,” the IMF said in its Global Financial Stability Report released on Wednesday.
International Monetary Fund (IMF) on Wednesday cautioned that corporate balance sheets would be hit hardest in India, besides China and South Africa, in case protectionism rises in the world. It also warned against bad debt of banks in India.
"In a scenario of rising protectionism,... the greatest deterioration in corporate balance sheets would occur in China, India and South Africa," IMF said in its Global Financial Stability Report released on Wednesday.
It added emerging market economies (EMEs) have become more resilient, benefitting from a recovery in global commodity prices and stillsupportive external conditions. Even then, these economies face challenges in several channels in case protectionism rises. The corporate and banking sectors could face broad-based risks, it added.
Turning to the banking sector, it said although the profitability of banks in EMEs is generally strong, particularly compared with that in the US and Europe, heavy credit losses continue to erode profits of many lenders, notably in Russia and India. It said nonperforming and problem loans have climbed in India due to sector-specific downturns.