New global debt crisis could be brewing: IIF

A NEW global debt crisis could be brewing with China and other emerging economies as well as some advanced economies looking especially vulnerable to possible trouble in the future, according to a new report from the Washington-based Institute for International Finance (IIF).

Economic recovery from the global financial crisis is now in its fifth year but despite what the IIF calls "tremendous liquidity provision", since then the recovery has been lacklustre, and "despite talk of deleveraging, global debt markets have increased in size virtually everywhere", it said.

The global financial crisis was triggered in part by high debt, and hence deleveraging was needed to restore financial health, said the IIF. But while banks and other financial institutions have been deleveraging, corporates as well as governments have been piling up more debt rapidly.