# World Bank Data shows untapped potential and resilience in emerging markets

- Link: https://www.thailand-business-news.com/banking/133789-world-bank-data-shows-untapped-potential-and-resilience-in-emerging-markets
- Published: 2024-03-29T00:02:53+07:00
- Author: World Bank

**WASHINGTON, March 28, 2024**—The World Bank Group today published sought-after
proprietary statistics that reveal the credit risk profile of private and public
sector investments in emerging markets.

Making this data publicly available is the latest in a concerted effort to drive
more private sector investment to emerging and developing economies.

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## Key Takeaways of World Bank Group Statistics:

 * The IFC’s private sector portfolio had a low default rate of 4.1% from 1986 to
   2023, suggesting the untapped potential and resilience of private sector investments
   in emerging markets.
 * For investments rated as “weak” by IFC’s internal rating system, the default 
   rate was only 2.6% during the period between 2017 and 2023, indicating that even
   investments considered higher risk can perform better than could be expected.
 * For sovereign borrowers, defaults are rare, averaging just 0.7% annually, and
   the World Bank typically recovers more than 90% of the amount owed, including
   both principal and interest. This underscores the World Bank’s preferred creditor
   status and its ability to effectively manage sovereign credit risk.
 * Sovereign default losses range from 0.01% to 58.5%, reflecting the effect of 
   interest rates and length of time in default.

Two separate reports are being provided for the first time ever. The International
Bank for Reconstruction and Development (IBRD) is sharing [sovereign default and recovery rate statistics](http://cutt.ly/Bw3wKzf1)
dating back to 1985. This information will help credit rating agencies and private
investors gain a deeper understanding of IBRD’s credit risk.       

At the same time, the International Finance Corporation (IFC) is providing [private sector default statistics](http://www.ifc.org/en/insights-reports/2024/ifc-portfolio-default-rate-analysis)
broken down by internal credit rating. The report provides insights that could help
private sector investors feel more confident about investing in emerging markets.

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_“We believe our proprietary information should be a global public good and sharing
it will provide transparency and inspire investor confidence,”_ said **World Bank
Group President Ajay Banga**. “_The publication of this data is aimed at one goal:
getting more private sector capital into developing economies to drive impact and
create jobs.”_

The World Bank Group analyses complement statistics produced by the Global Emerging
Markets Risk Database Consortium (GEMs), a group of 25 multilateral development 
banks and development finance institutions that pools similar data and publishes
them as a combined resource for public use.

The consortium releases sovereign and private sector default statistics annually.
Earlier this week, the consortium expanded the materials they publish to include
private sector recovery rates disaggregated by country income, regions, and sectors.

To ensure the quality of the information, IBRD staff spent more than a year recovering
and cleaning sovereign default data covering the period 1985 to 2023. These statistics
are unique to IBRD due to its global portfolio and long historical record. Similarly,
IFC’s private sector default statistics have been compiled over nearly 40 years 
and published as a standalone report to respond to the urgent need of investors 
for emerging market insights. In time, these statistics might also be combined with
other data from development institutions and published through the GEMS Consortium.

The World Bank Group’s comprehensive data can inform more nuanced risk assessments,
leading to better investment decisions and improved access to capital for emerging
markets. This new reporting will support private investment in developing economies–
by increasing transparency on historical performance, helping investors gauge risk-
reward premiums, and bolstering confidence on the state of emerging markets.