WEF Sees Red On Rising Global Debt, Concerned Over Future Growth

RIYADH, Saudi Arabia, Monday, May 6, 2024 – The world’s debt burden has reached alarming levels, comparable to those seen during the Napoleonic Wars, according to World Economic Forum President Borge Brende. ¹

The World Economic Forum (WEF) convened a meeting in Riyadh, Saudi Arabia, on April 28 and 29 to address critical challenges facing the global community.

In an interview with CNBC at a WEF special conference in Riyadh, Brende warned that global debt was nearing 100% of total economic output, a troubling sign for future growth.

He said that data from the International Monetary Fund (IMF) showed that global public debt reached $91 trillion in 2022, representing 92% of global GDP.

While this figure marks a slight decrease from pandemic highs, it reflects a long-term trend of rising debt.

While historical data on debt during the Napoleonic Wars is limited, estimates suggest British government debt surpassed 200% of GDP by 1815.

Brende emphasized the need for governments to implement responsible fiscal policies to reduce debt levels without triggering a recession.

Despite current global growth rates hovering around 3.2%, which Brende considers acceptable, this falls short of the 4% trend observed in previous decades.

He cautioned that escalating trade tensions could lead to a repeat of the stagnant growth experienced in the 1970s.

The WEF’s concerns about global debt echo broader anxieties about rising debt levels in major economies like the United States and China.

The IMF recently highlighted the potential dangers of increasing U.S. government debt, which could push global interest rates and borrowing costs higher. ²

Projections indicate that U.S. spending on servicing its debt will surpass defense spending in 2024, and U.S. public debt could balloon to 166% of GDP by 2054.

Global Outlook Report can be seen here and the IMF report on US debt and Economy can be seen here.

Sources