WASHINGTON - Lending by multilateral development banks (MDBs) and development finance institutions (DFIs) to private entities in emerging markets performed comparably to that in advanced economies, with an average default rate of 3.54% and recovery rates exceeding global benchmarks at 72.9%, according to new statistics by the Global Emerging Markets Risk Database (GEMs) Consortium.

The results shed light on investment risks and opportunities in emerging markets and developing economies (EMDEs) and underscore the importance of greater data transparency in supporting private capital mobilization and portfolio diversification in EMDEs.

These markets face significant financing challenges, with a potential cumulative shortfall of more than $10 trillion by 2050, according to the Organisation for Economic Cooperation and Development (OECD). GEMs data show that, despite these challenges, credit performance in EMDEs has been more resilient than commonly perceived, highlighting the potential for scaling investment.

"By providing more granular statistics, GEMs enables investors, credit rating agencies, and policy institutions to better understand and manage investment risks in regions that have historically been underserved by empirical credit risk information," said Rachel Robboy, Chief Risk Officer at IDB Invest. "Investments in these economies need to be scalable, and GEMs provides the statistical foundation to help IDB Invest, and investors, meet that goal."

The GEMs statistics offer detailed insights into the credit risk performance of MDB and DFI lending to public, private, and sovereign or sovereign-guaranteed entities in EMDEs. The three new publications are available at https://www.gemsriskdatabase.org/recent-publications.