World Bank: Emerging economies need faster growth to keep up with their debts

The World Bank confirmed that the rise in borrowing costs “creates a boom” in the need of developing countries to stimulate slow economic growth, as this comes with international bond sales from emerging market governments recording an unprecedented level of $47 billion in January, and emerging economies came in the lead. Its debts are among the least risky, such as Saudi Arabia, Mexico, and Romania.

According to Reuters, Ayhan Kosi, deputy chief economist at the World Bank, said, “When it comes to borrowing, there is a boom happening.” “There is a need to grow much faster,” he said, but he declined to comment on specific countries.

He gave an example by saying, “If I had a mortgage with an interest rate of 10%, I would be worried,” indicating that achieving a faster pace of growth, especially the real growth rate, at more than the real cost of borrowing may prove difficult.

The World Bank indicated in its Global Economic Prospects report that the global economy is set to record the weakest five-year performance in 30 years between 2020 and 2024, even if a recession is avoided. He expected global growth to slow for the third year in a row to 2.4 percent before rising to 2.7 percent in 2025.

The report indicated that these rates are still much lower than the average of 3.1% recorded in the past decade.

Kosi said that if growth remains low, some emerging economies may be forced to restructure debts, by adjusting maturities or agreeing to reduce debt values with creditors.