Economic recovery of the global economy is a highly disputable question among different research institutions nowadays. Even the IMF feels pretty uncertain about the prospects of the future recovery in its freshest review, analyzed by thetradable.com, a web resource devoted to highlighting financial news from various markets.
Recently, the institution expressed its concerns regarding the possible deepening of the current crisis. The IMF is sure the global economy has a number of bottlenecks at the moment. Literally all of them may not withstand the growing pressure and collapse. Corporate Debts The IMF researchers convince that the health of corporate credit markets is gradually worsening.
The main problems are the decreased solvency of the borrowers as well as decaying underwriting standards. These challenges exert a negative influence on the ability of companies to return their loans. There are some expectations the banks would manage to cope with the uncertainty in corporate credit markets. But to be honest, the banks aren’t the most important players in this segment.
Actually, it is nonbank financial institutions that provide more credits to various businesses. So they experience more losses during these hard times. There is a high risk the nonbank financial institutions will not withstand the pressure and decrease the amount of credits to the corporate sector. This, of course, will not contribute to the stability of the global economy. Growing Markets Global recession hit the emerging markets first of all. Compared to the last crisis, the capital outflow increased two times and amounted to $100 billion. All this influenced negatively the attractiveness of the risky assets of the emerging markets.
Interest Rates Attracted by the low interest rates, the banks borrowed more from the government. However, it became more challenging to remain profitable. IMF convinces the banks detected the complications long before the downfall.