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Emerging markets to face credit crisis in 2019 over currency fall: Report

The crucial US-China relationship is likely to worsen significantly on US President Donald Trump's hardline approach to reduce bilateral trade deficit with China

IANS  |  New Delhi 

Illustration by Ajay Mohanty
Illustration by Ajay Mohanty

Credit crisis in like is likely to grow both in scale and scope in 2019 due to the foreign-denominated debt and currency depreciations, a study said on Thursday.

"An credit crisis will unfold in 2019... Pressure on will also mount as the increases interest rates and the dollar strengthens, raising the cost of repaying foreign currency-denominated loans," an report said.

China, which owns roughly 20 per cent of African nations' external government debt, will not have its debts due by the end of the year serviced, the report said.

Argentina's balance of payments has been strained by both domestic and foreign investors liquidating their positions in on-shore peso assets. As a result, the IMF dispersed a three-year stand-by agreement loan of $57 billion.

"recently said it also intends to seek an IMF bailout as its foreign currency reserves dwindle," it said. The credit crisis will lead to at least two more countries joining in asking IMF for bailouts in 2019, it added.

However, on a positive note, the report said the emerging markets of will greatly enhance their interconnectivity in 2019, which could begin to put the region on a more sustainable growth path.

The report also predicted further deepening of relationship between Chinese and Russian Vladimir Putin, and that they would "become more vocal critics, both together and separately, of US trade policies and other 'America First' actions".

The crucial US-relationship is likely to worsen significantly on US Donald Trump's hardline approach to reduce bilateral trade deficit with

First Published: Thu, December 27 2018. 20:06 IST