Credit growth accelerated overall economic development, but the speed of credit expansion also has an important influence. The rapid growth in the size of credit usually associated with lax regulation and real estate speculation, which may bring non-performing loans, and lead to low returns on investment.
Consulting firm Capital Economics data show that between 2007 and 2011, China, Brazil, Turkey, Poland and other private sector loans to GDP ratio increased by 20%.
When the economy is in a period of rapid growth, the problem of low efficiency of investment can easily be concealed. But with the emerging market countries, economic slowdown, the true cost of the credit boom will emerge. Even a slight slowdown in economic growth, may have a tremendous impact on sensitive, highly leveraged industries such as real estate. Once a small number of the buyer began to shake confidence in, these feelings will quickly spread to other areas, tiny concerns may also lead to a crisis of confidence.
Systemic problems with Greece, this is only a cyclical problem. Many emerging market countries really need is time to sort out the economic context, screening the quality of investment projects, dealing with debt problems, and continue to move forward. Given the current weakness of the world economy, emerging market countries or any country may not have the conditions of this time.
Bank for International Settlements warned that rapid growth in the size of credit "is usually a harbinger of the financial crisis". Homes and businesses servicing costs in Brazil, China, Turkey and India, has now reached the highest level since the Asian financial crisis in the late 1990s.
Other News:
The cost of emerging markets rapid credit expansion has been revealed
Italy launched a ? 26 billion austerity Deal
EU finance ministers intends to allow Spain to extend the completion of the def
TIMKEN bearings running sound caused by a Failure Analysis
Note check on the operation of the INA roller bearing
The local government of Spain yesterday issued with a default warning
U.S. officials said it would deploy the Osprey machine to assist Japan's ＂defens
People's Liberation Army East China Sea exercise cited concern about foreign med
