In its biannual Global Economic Prospects (GPE) report, the organisation warned of a “debt accumulation wave” which could have an “unhappy ending”.
In the report, the World bank highlighted four waves of debat accumulation.
The previous three all ended in a financial crisis in many developing countries.
The current wave started in 2010 and according to the organisation, it is “the largest, fastest and most broad-based increase” since the 1970s.
Ayhan Kose, director of the World Bank’s Prospects Group, said in the report: “Low global interest rates provide only a precarious protection against financial crises.
“The history of past waves of debt accumulation shows that these waves tend to have unhappy endings.
“In a fragile global environment, policy improvements are critical to minimize the risks associated with the current debt wave.”
More to follow…