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Rising Tide of Global Debt Drives Fears of Emerging Markets Crisis

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Rising Tide of Global Debt Drives Fears of Emerging Markets Crisis THURSDAY 19 NOVEMBER 2020 WORLD BUSINESS NEWSPAPER EUROPE No green light Edge of an abyss Measure for measure Central bankers cannot lead the The conflicts pushing Ethiopia to Europe inches towards an industrial climate fight — JENS WEIDMANN, PAGE 17 the brink of civil war — BIG READ, PAGE 15 strategy — INSIDE BUSINESS, PAGE 6 Berlin divide Briefing Far-right taps i Arrival to list in US via deal with Spac Arrival, the Hyundai-backed UK electric bus and van maker will list in the US via a reverse takeover into virus rage with Nasdaq-listed CIIG, a “blank cheque” special purpose acquisition company.— PAGE 6; LEX, PAGE 18 Police use water cannon to stop anti- lockdown protesters in Berlin yester- i Norwegian files for bankruptcy cover day. The demonstrators, who refused to Norwegian Air Shuttle is to file for protection from wear masks or maintain social distanc- creditors, becoming the aviation sector’s largest ing, banged pots and shouted “Peace! casualty of the pandemic. It said it would use the Freedom! No dictatorship!” in opposi- revamp to cut its NKr48bn ($5.3bn) debt.— PAGE 7 tion to plans for a law placing Covid restrictions on a firmer legal footing. i Minister quits over mink-cull scandal The march featured a mix of mystics, Mogens Jensen, Denmark’s anti-vaxxers and libertarians, although agriculture minister has quit, concern is mounting that the anti- becoming the first government lockdown movement has been infil- figure to fall over an illegal trated by the far-right. Alternative for order to kill the country’s entire Germany, the populist rightwing party, 17m mink population.— PAGE 2 interrupted proceedings in parliament yesterday to stage its protest at the new i Pfizer vaccine better than first reported law by draping copies of the German Pfizer and BioNTech are to submit their Covid-19 constitution in black ribbons. vaccine for US and EU emergency approval “within Report page 2 days”, after new data showed that it was even more Christian Mang/Reuters effective than initially reported.— PAGE 6 i Bitcoin soars to near-record highs After a run that has seen it jump more than 50 per cent in 30 days, Bitcoin has surged to within striking distance of the record high it set three years ago, but Rising tide of global debt drives some analysts warned of a correction.— PAGE 9 i Egypt arrests human rights director Security forces have arrested an executive at Egypt’s most respected human rights organisation in a sharp escalation of the government’s crackdown on civil fears of emerging markets crisis society movements.— PAGE 4 i US in U-turn on former Mexican official An ex-Mexican defence minister who was being held 3 Borrowing to exceed $277tn 3 Zambia latest to default 3 G20 tries to unlock IMF funds in New York for trial will return to his home country after a judge granted US prosecutors’ request to drop Jonathan Wheatley — London product by the end of 2020, surging But analysts said more action was Some $7tn of debt will have to be drug trafficking and laundering charges.— PAGE 3 from 320 per cent at the end of 2019. needed to fend off the risk of a fiscal cri- repaid by borrowers in emerging mar- Global debt rose at an unprecedented Debt burdens are especially onerous sis in a number of developing countries. kets before the end of next year, accord- pace in the first nine months of the year in emerging markets, having risen Luis Oganes, head of emerging mar- ing to IIF estimates, of which about 15 as governments and companies 26 percentage points so far this year to ket research at JPMorgan, said develop- per cent is in US dollars, exposing debt- Datawatch embarked on a “debt tsunami” in the approach 250 per cent of GDP, the IIF ing economies ran the risk of rising ors to the risk of currency fluctuations. face of the coronavirus crisis, according said. The share of EM governments’ rev- inflation if they sought to monetise debt The impact of Emre Tiftik, IIF director of sustaina- Track record In the two weeks to research. enues spent on repayments has also by buying their own bonds, as some had Covid-19 will bility research, said debt levels had risen Cumulative UK government spending to October 9, The unprecedented pace of debt accu- risen sharply this year, IIF data show. done this year, or of deflation if they leave nations much faster than anticipated at the start on Covid- response contracts (bn) UK government mulation will leave the global economy This week Zambia became the sixth allowed debts to rise too far. hard-pressed to of the crisis. From 2016 to the end of 8 spending on its struggling to reduce borrowing without developing nation to default or restr­uc­- “High debt levels will lead to zombie cut debt without September, global debt rose by $52tn; PPE test and trace 6 system in “significant adverse implications for ture debts in 2020. More defaults loom banks and zombie companies that con- ‘significant that compares with an increase of $6tn NHS Test & Trace response to economic activity”, the Institute of Int­- as the cost of the pandemic mounts. strain growth,” he said. adverse between 2012 and 2016. The pace of Hospitals/ 4 medicines Covid-19 surged er­national Finance warned yesterday. The G20 group of the world’s largest Since the start of the pandemic cen- implications growth in global GDP changed little over by almost £2bn, The total level of global indebtedness economies has launched an initiative tral banks have cut interest rates and for economic that period until the onset of the pan- 2 bringing the has increased by $15tn this year and is that has so far allowed 46 of the world’s pumped stimulus into the world econ- activity’, says demic triggered a historic recession. Other 0 overall outlay on on track to exceed $277tn in 2020, said poorest countries to delay about $5bn in omy, which has helped to lower borrow- the IIF study The change in debt suggests “a signifi- Jan 2020 May Jul Sep Nov a highly criticised the IIF, which represents financial insti- debt repayments due this year. They are ing costs worldwide. Despite that, col- cant reduction in the GDP-generating Contracts should be publicised within 30 days monitoring tool tutions. It expects total debt to reach also edging towards unlocking addi- lapsing tax revenues have made emerg- capacity of debt”, Mr Tiftik said. of award Source: Tussell to £6.1bn. 365 per cent of global gross domestic tional IMF funds for poorer nations. ing market debts harder to service. G20 nears relief funds accord page 4 Dimon blames ‘childish’ Congress for deadlock on Covid stimulus package Robert Armstrong — New York $2tn package of measures to prop up the need to get through this next phase.” economy. But they did not reach a deal. Yesterday’s political intervention was Jamie Dimon, chief executive of Speaking of the impasse on Capitol not Mr Dimon’s first in recent days. Last JPMorgan Chase, has criticised the US Hill, Mr Dimon said: “I would have week he strongly suggested that Donald Congress for failing to pass further fis- walked into that last negotiation [and] if Trump had lost the presidential election cal stimulus, saying its inability to cut a I had to give it all up on either side, it to Joe Biden and that he should concede, Trump in race against time deal reflects “childish behaviour by our would have been great for the country. saying: “We must respect the results of to disrupt election results politicians”. They should have focused on what was the US presidential election and, as we Analysis i PAGE 4; Notebook i PAGE 16 “We’ve got to focus on the job at hand,” great for the country.” have with every election, honour the Mr Dimon said at a conference yester- The Wall Street veteran’s plea for gov- decision of the voters.” day. “We need some fiscal stimulus, just ernment aid echoed similar calls by He offered conditional praise for Mr Austria €3.90 Malta €3.70 to bring us through” the Covid-19 crisis. other business leaders. Doug McMillon, Trump’s policies, however, when it Bahrain Din1.8 Morocco Dh45 Belgium €3.90 Netherlands €3.90 “Is it $2.2tn, $1.5tn? You’ve got to be chief executive of Walmart, said on came to China. “I wouldn’t have done Bulgaria Lev7.50 Norway NKr40 kidding me. Just split the baby and Monday that worsening Covid-19 infec- the tariffs, but I do think President Croatia Kn29 Oman OR1.60 Cyprus €3.70 Pakistan Rupee350 move on,” Mr Dimon said, arguing that tion rates required a political response. Trump got [the Chinese] to the table.” Czech Rep Kc105 Poland Zl 20 Denmark DKr38 Portugal €3.70 Congress was failing the US people, who “The increasing cases will put more Asked whether he would consider Egypt E£45 Qatar QR15 feel “deep, deep, deep frustration”. pressure on small businesses that have taking the job of Treasury secretary in a Finland €4.70 Romania Ron17 France €3.90 Russia €5.00 In the run-up to the US presidential been heavily impacted by the pan- Biden administration — a possibility Germany €3.90 Serbia NewD420 Gibraltar £2.90 Slovak Rep €3.70 election, Nancy Pelosi, the Democratic demic,” Mr McMillon said. “It will be that has been the subject of speculation Greece €3.70 Slovenia €3.70 Speaker of the House of Representa- imperative that elected officials in — Mr Dimon demurred.
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