Emmanuel OchayiThe World Bank Group is pushing for a renewed focus on emerging markets, encouraging investors to delve into untapped opportunities with fresh eyes.
In a recent announcement, the multilateral lender emphasized leveraging data to attract private sector investments into developing economies.
“Our data should be a global public good,” stated World Bank Group President Ajay Banga. “Sharing it will provide transparency and inspire investor confidence.”
The World Bank released two reports, providing insights into sovereign default and recovery rates as well as private sector default statistics.
The International Bank for Reconstruction and Development shared sovereign default statistics dating back to 1985, while the International Finance Corporation provided private sector default statistics spanning nearly 40 years.
According to the reports, the private sector portfolio of the International Finance Corporation exhibited a low default rate of 4.1% from 1986 to 2023, indicating the resilience of private sector investments in emerging markets.
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“For investments rated as ‘weak,’ the default rate was only 2.6%,” noted the World Bank, suggesting that even higher-risk investments can perform better than expected.
Sovereign defaults, on the other hand, are rare, averaging just 0.7% annually. They typically recovers more than 90% of the amount owed, including both principal and interest.
The World Bank emphasized that sharing this data would support private investment in developing economies by increasing transparency on historical performance, helping investors assess risk-reward premiums, and bolstering confidence in the state of emerging markets.
