ECONOMICS
Pulled back in. The world is entering a third stage of a rolling debt crisis, this time centred
on emerging markets
Summary
The article “Pulled back in. The world is entering a third stage of a rolling debt crisis, this time
centred on emerging markets” was published on the 14th of November 2015 in The Economist. The
main idea of the article is devoted to the possible debt crisis in the emerging economies. Increasing
unstable situation in the emerging markets can be a next direction of the last financial. The “crises-
trilogy” started in 2000s with the boom in the housing market in the United States. Later it led to the
financial crises in 2007. Then it continued in Eurozone in 2010. The author compares the world’s debt
crisis with a series of a film: the conclusion of a one crisis becomes a beginning of the other, and
emerging countries now are the main characters. The content of the article can be divided into three
main parts.
In the beginning the author supposes that the credit boom in emerging markets was a response to
the credit failure in developed countries. Money was running from America and Europe to Asia and
Africa. As a result, emerging economies attracted large investments. The article shows that the rise in
credit and in exchange rates are the two main signs of future problems with debt. The greater part of
credit is concentrated in the corporate sector. The author argues, that corporate debt is less damaging
than consumer debt (that was in America in 2000s). According to the article, it is more important to
track the speed of rising debt, but not the share in the GDP, because rapid debt can lead to instability.
In the second part of the article Manoj Pradhan of Morgan Stanley divides three types of
emerging countries. The division is organized due to their ability to resist the debt crises. The main
criteria are current-account balance, private debt share and the inflation rate.
