The World Bank Group has taken a significant step towards boosting investment in emerging markets by publishing valuable proprietary statistics aimed at providing transparency and inspiring investor confidence. This move, which makes previously inaccessible data publicly available, is part of a broader effort to attract more private sector capital to developing economies.

In a groundbreaking development, the International Bank for Reconstruction and Development (IBRD) is sharing sovereign default and recovery rate statistics dating back to 1985, offering insights into the credit risk profile of private and public sector investments in emerging markets. Simultaneously, the International Finance Corporation (IFC) is releasing private sector default statistics, providing a granular breakdown by internal credit rating. These reports are intended to empower credit rating agencies and private investors with the information needed to make informed investment decisions in emerging markets.

World Bank Group President Ajay Banga emphasized the importance of transparency and investor confidence in driving private sector investment in developing economies. By making proprietary information a global public good, the World Bank Group aims to facilitate the flow of capital into these markets, thereby promoting economic impact and job creation.

The World Bank Group’s data release complements existing statistics provided by the Global Emerging Markets Risk Database Consortium (GEMs), further enhancing transparency and risk assessment capabilities for investors. The consortium, consisting of multilateral development banks and finance institutions, publishes sovereign and private sector default statistics annually, contributing to a comprehensive understanding of emerging market dynamics.

Key takeaways from the World Bank Group’s statistics highlight the resilience and untapped potential of private sector investments in emerging markets. Despite perceptions of higher risk, the IFC’s private sector portfolio exhibited a low default rate of 4.1% from 1986 to 2023, with even investments categorized as “weak” demonstrating favorable performance. Additionally, sovereign defaults are rare, averaging just 0.7% annually, underscoring the World Bank’s preferred creditor status and effective management of sovereign credit risk.

The comprehensive data provided by the World Bank Group facilitates more nuanced risk assessments and better-informed investment decisions, ultimately leading to improved access to capital for emerging markets. By increasing transparency on historical performance and bolstering investor confidence, this initiative aims to catalyze private investment in developing economies, driving sustainable growth and development.