Any Financial crisis is linked to excess debt. And the world
economy painfully experienced it in 2008. Why I am raising it now? Actually new
data released on Monday by Bank For International settlements shows that china's
debt is 248% of its GDP. The steep increase since 2008 is mostly explained by
the credit spree unleashed by Chinese Banks under pressure from its government
in a bid to keep the economy stable. And the option of reducing these debts
does not exist because producer prices have been falling for years now because
of massive over capacity. So the Chinese debt mountain is a clear source of
worry. After all it is the second biggest economy in the world. It could be
next source of global financial instability.
Contributed by CA Anil Gupta
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