Over－borrowing risks in emerging markets could weigh down global economy IMF，

The International Monetary Fund says some of the biggest risks to the global economy are now in emerging markets，… where firms have accumulated a massive amount of debt，… and Korea is no exception. Shin Se－min reports. The International Monetary Fund says private companies in emerging markets have racked up an estimated three－trillion U.S. dollars of debt due to over－borrowing， raising concerns about a possible credit decline and capital outflows. At the fund′s annual meeting in Peru on Wednesday， top bank official Jose Vinals said the unprecedented lending spree has come to an end with the sharp decline in prices for oil and commodities，… largely attributed to China′s economic slowdown. ″Higher leverage in the private sector has left many firms in emerging markets more susceptible to economic downturns and emerging economies more exposed to capital outflows into deteriorating quality.″ The worst－case scenario， he said， would be，… a ″vicious cycle of fire sales and volatility.″ He added that over－borrowing in rising economies is estimated to add up to some 15－percent of their gross domestic product，… and nearly 25 of China′s GDP. And Korea is no exception. The rise in the number of so－called ″zombie companies，″ or firms that don′t generate enough operating profit to make tax and interest payments， is plaguing the Korean economy. Local corporate debt reached over two－trillion dollars in the first three months of the year，… up more than 88－billion from the same period last year. ″It′s estimated that nearly one－third of Korean firms are considered ″′zombie companies，′ and with a possible rate hike in the forecast，… the firms′ debt could increase even more.″ Experts say， however， that any restructuring of the firms should take place without hurting existing policies to boost employment， particularly for the nation′s young people. Shin Se－min， Arirang News.