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World Bank economist fears repeat of ’80s debt crises

Inflation and weak growth put emerging markets at risk, says in an interview Ayhan Kose, director of the World Bank’s Prospects Group. Stagflation is a bigger risk for advanced economies than emerging markets. Da Nikkei.

As central banks tighten monetary policy to tame galloping inflation, a rapid rise in interest rates will put heavily indebted emerging economies in a precarious position, Ayhan Kose, director of the World Bank’s Prospects Group, told Nikkei.

Kose, who also serves as chief economist for the Prospects Group’s parent office, sees striking similarities between the current situation and the debt crises of the 1970s and ’80s as less-developed nations get squeezed by high debt, inflation and weak fiscal positions.

Kose also warns that higher commodity prices and pandemic-related disruptions could worsen supply chain snarls, weaken growth and send inflation higher, creating conditions for stagflation.

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