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Higher interest rates exposing private sector debt risks

Higher interest rates and larger private sector debt burdens mean that debt interest service ratios could rise to levels last seen in the 1990s in many EMs next year. This is unlikely to be a major problem in a handful of EMs such as South Africa, India and other parts of Asia. But among those counties we think could face particularly large increases in household and corporate debt interest service ratios, we’re most concerned about Brazil and Chile and to a lesser extent Colombia, Peru, Korea and Central Europe.

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