As investors continue to fret over the tapering off of liquidity in the U.S. and the impact on global markets, a World Bank economist tells CNBC the move poses a particular risk to Asian investors as he expects interest rates to start rising again.
Andrew Burns, a lead economist with the Development Prospects Group at the World Bank, said a less supportive global economic environment will inevitably lead to an end to the “unsustainable” world of lower interest rates, particularly in Asia.
“As liquidity becomes less abundant… there’s going to be a less supportive global environment and that’s going to show up in higher interest rates,” said Burns.
“Loans that have been undertaken at higher interest rates won’t be viable… particularly in countries in East Asia and [Asia] Pacific, specifically, where there’s been a very significant increase in credit over the last few years,” he added.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.