US Fed-induced world stagnation deepens debt distress
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The last decade and a half has seen protracted worldwide stagnation, worsened by the 2008 global financial crisis, the Great Recession, the Covid-19 pandemic, US Federal Reserve-led interest rate hikes, and escalating geopolitical economic warfare. Unconventional monetary policies, mainly 'quantitative easing' (QE), encouraged more borrowing as more credit became available and affordable. However, the resulting borrowing surge has returned to haunt economies since 2022-23 when interest rates spiked. Developing countries, heavily indebted and with little policy space, face more constraints and vulnerability. Debt stress has grown tremendously in the last two years, especially for developing countries borrowing heavily in major Western currencies. China's lending to developing countries has fallen since 2016, and private capital has fled to the US and other Western markets. Negotiating with private creditors in markets has proved difficult, and there is little hope for significant debt relief or strong recovery in the Global South.

#UsFederalReserve #DebtDistress #WorldwideStagnation #Borrowing #DevelopingCountries

https://theedgemalaysia.com/node/718951