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Tag Archives: Debt

The Next Move: Consequences for Emerging Markets

By Gita Bhatt We focus this issue of Finance & Development on the road ahead for emerging markets, a label frequently applied to economies in the middle—neither advanced nor low-income. Because of their growing systemic relevance, this group of countries helps anchor global stability. Yet, as we drill down and define their characteristics, we find a widely diverse set of economies of varying sizes and growth rates that face different prospects, priorities, and challenges. Some, like...

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Small Business Owners Turn to Personal Credit

Andrew F. Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw In our first post in this series we showed that mortgage provisions under the CARES ACT and its subsequent extensions resulted in a rapid take-up of mortgage forbearances, under which borrowers had the option to pause or reduce debt service payments without inducing a delinquency notation on their credit reports. Here we examine the forbearance take-up rate of a group of mortgage borrowers we expect...

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What Happens during Mortgage Forbearance?

Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw As we discussed in our previous post, millions of mortgage borrowers have entered forbearance since the beginning of the pandemic, and more than 2 million remain in a program as of March 2021. In this post, we use our Consumer Credit Panel (CCP) data to examine borrower behavior while in forbearance. The credit bureau data are ideal for this purpose because they allow us to follow borrowers over...

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Keeping Borrowers Current in a Pandemic

Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw Federal government actions in response to the pandemic have taken many forms. One set of policies is intended to reduce the risk that the pandemic will result in a housing market crash and a wave of foreclosures like the one that accompanied the Great Financial Crisis. An important and novel tool employed as part of these policies is mortgage forbearance, which provides borrowers the option to pause or...

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The Policymaker’s Trilemma

By Abebe Aemro Selassie and Andrew Tiffin 中文, Español, Français, 日本語,  Português, Русский Imagine you’re a policymaker in sub-Saharan Africa. You’ve been charged with lifting your country out of the worst health crisis in living memory, and nobody around you knows when it will end—the second wave that gripped the region earlier in the year has eased, but many countries are nonetheless bracing for further waves as winter approaches. One piece of good news is that a global recovery is well...

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A Future with High Public Debt: Low-for-Long Is Not Low Forever

By Marcos Chamon and Jonathan D. Ostry Many countries are experiencing a combination of high public debt and low interest rates. This was already the case in advanced economies even prior to the pandemic but has become even starker in its aftermath. A growing number of emerging market and developing economies are likewise enjoying a period of negative real rates—the interest rate minus inflation—on government debt. The IMF has called on countries to spend as much as they can to protect the...

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How Rising Interest Rates Could Affect Emerging Markets

  By Philipp Engler, Roberto Piazza and Galen Sher عربي, 中文, Español, Français, 日本語, Português, Русский Rapid vaccine rollout in the United States and passage of its $1.9 trillion fiscal stimulus package have boosted its expected economic recovery. In anticipation, longer-term US interest rates have risen rapidly, with the rate on 10-year Treasury securities going from under 1 percent at the start of the year to over 1.75 percent in mid-March. A similar surge has occurred in the United...

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The Future of Asia: What a Difference a Year Can Make

By Chang Yong Rhee and Katsiaryna Svirydzenka  中文, 日本語 The Sydney Opera resumed live performances and the city of Melbourne recently hosted the Australian Open tennis tournament with fans (mostly) in attendance. Japan is back to planning the delayed 2020 Summer Olympics, while China focuses on the Beijing 2022 Winter Games. Having been hit by COVID-19 first, Asia is also recovering first. At the pandemic’s first anniversary, is the region back to full health? Asia must remain agile and...

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The Great Divergence: A Fork in the Road for the Global Economy

By Kristalina Georgieva عربي, Español, 日本語, Русский  As G20 finance ministers and central bank governors meet virtually this week, the world continues to climb back from the worst recession in peacetime since the Great Depression. The IMF recently projected global GDP growth at 5.5 per cent this year and 4.2 per cent in 2022. But it is going to be a long and uncertain ascent. Most of the world is facing a slow rollout of vaccines even as new virus mutations are spreading—and the prospects for...

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Chart of the WeekThe Pre-Pandemic Debt Landscape—and Why It Matters

By Xuehui Han, Paulo Medas, and Susan Yang Many countries entered the pandemic with elevated debt levels. Our new update of the IMF’s Global Debt Database shows that global debt—public plus private—reached $197 trillion in 2019, up by $9 trillion from the previous year. This substantial debt created challenges for countries that faced a debt surge in 2020, as economic activity collapsed and governments acted swiftly to provide support during the pandemic. Higher debt can potentially reduce...

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