MNI: Quarter Of Emerging Economies Cut Off From Bond Market

One-quarter of emerging and developing market economies have been cut off from international bond markets amid the global credit squeeze according to a World Bank report Tuesday, adding to strains from stalling economic growth.

Most of those economies "have seen only limited harm from the recent banking stress in advanced economies so far, but they are now sailing in dangerous waters," according to the latest Global Economic Prospects report.

"Fiscal weaknesses have already tipped many low-income countries into debt distress," said World Bank chief economist Indermit Gill. Poorer nations with low creditworthiness have seen their growth projections for this year cut in half and leaving them vulnerable to more shocks, the report said. (See: MNI INTERVIEW: Era of Shortages To Force Rates Up - Bill White)

Global growth will slow to 2.1% this year from 3.1% in 2022 according to the report, with financial stress now adding to the strain of the Ukraine war. Higher U.S. interest rates can trigger a rise of borrowing costs in "frontier markets" that's three times higher relative to developing-market peers, the World Bank said.