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Chart today comes from a recent IMF report on Central and Eastern Europe
where policies should aim
Chart today comes from a recent IMF report on Central and Eastern Europe
where policies should aim to support the recovery and address excessive private sector debt, the report says. Some countries need urgent progress on the structural reform agenda to escape the debt trap and sub-par medium-term growth.
A positive “credit gap” exists when private debt is high, compared to a country’s fundamentals — its GDP and nominal interest rates. Post-crisis deleveraging efforts have not managed to close the gap in many countries. At the end of 2013, credit gaps were still wide in several SEE countries, Ukraine, Russia, and Turkey. Firms in these countries are also typically more exposed to liquidity or solvency risks.
Projections of the credit gap into the medium-term suggest that the debt burden will remain a drag on credit and growth in some countries, unless decisive action is taken. This is particularly true for Bulgaria, Croatia, and Ukraine.
Chart today comes from a recent IMF report on Central and Eastern Europe
where policies should aim to support the recovery and address excessive private sector debt, the report says. Some countries need urgent progress on the structural reform agenda to escape the debt trap and sub-par medium-term growth.
A positive “credit gap” exists when private debt is high, compared to a country’s fundamentals — its GDP and nominal interest rates. Post-crisis deleveraging efforts have not managed to close the gap in many countries. At the end of 2013, credit gaps were still wide in several SEE countries, Ukraine, Russia, and Turkey. Firms in these countries are also typically more exposed to liquidity or solvency risks.
Projections of the credit gap into the medium-term suggest that the debt burden will remain a drag on credit and growth in some countries, unless decisive action is taken. This is particularly true for Bulgaria, Croatia, and Ukraine.
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