Asia is world’s largest producer of ‘zombie’ firms, IMF warns
The IMF has warned that 'zombie firms'—companies unable to cover interest payments for three years—now account for over 20% of Asia's corporate debt. The report highlights that state subsidies, particularly in China, are fueling inefficient growth rather than profitability.
Why it matters
The proliferation of debt-laden, unproductive companies poses a significant systemic risk to the stability of Asian financial markets.
The IMF warned that “zombie companies” — whose earnings haven’t covered interest payments for at least three years — now comprise more than a fifth of Asia’s outstanding corporate debt, potentially posing a systemic risk.
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