The top economist at the World Bank, Chief Economist Carmen Reinhart, said in an interview on Thursday that the coronavirus pandemic is “morphing into a major economic crisis”. “This is a war,” she said about central banks trying to keep yields low by buying bonds. “During wars governments finance their war expenditures however they can and right now there are dire needs."
Nearly 60% of the debt due from poorer nations this year is owed to China. She said about half of poorer countries are either in or approaching “debt distress.” She added the “vulnerabilities” for lower-income countries and emerging markets are much greater than for advanced economies. This is truly a global crisis.”
Reinhart said she’s called it the “quieter crisis” because banks have given extensions to businesses and households in loan repayments. “When the dust settles, some of those loans are not going to be repaid." She said that would likely have big consequences for bank balance sheets.
Source: Top World Bank economist says coronavirus pandemic morphing into 'major economic crisis'
16 Oct 2020, 8:59 am
