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 enable 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. "GEMs provides the statistical foundation to help IDB Invest, and peer institutions, mobilize at scale in emerging markets."

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 www.gemsriskdatabase.org/recent-publications.

About IDB Invest

IDB Invest is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social, and environmental development in the region. With a portfolio of $22 billion in assets under management and more than 400 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries. Visit our website www.idbinvest.org/en.

About GEMs

The Global Emerging Markets Risk Database (GEMs) Consortium is a joint initiative of 29 multilateral development banks (MDBs) and development finance institutions (DFIs) that pools credit risk data on their lending operations in Emerging Markets and Developing Economies (EMDEs) and provides members and the public with the related statistics. Governed by a Steering Committee co-chaired by the European Investment Bank (EIB) and the International Finance Corporation (IFC), GEMs is the largest database of credit risk statistics on EMDEs. The GEMs Consortium is committed to raising awareness of its statistics to spur private investment in EMDEs and support standard setting bodies and pivotal stakeholders in their assessments and perceptions of credit risks in EMDEs. For more information about GEMs, visit www.gemsriskdatabase.org.