Business Reporter
The International Monetary Fund warned that global public borrowing will likely surge this year as trade tensions triggered by the US lead to slower economic growth and more volatility in financial markets.
The IMF expects public debt to jump 2,8 percentage points this year, more than twice what it estimates for 2024.
That would push global government debt above 95 percent of gross domestic product, the Washington-based lender said in its latest Fiscal Monitor, published on Wednesday.
“This upward trend is likely to continue, with public debt nearing 100 percent of GDP by the end of the decade, surpassing pandemic levels,” the IMF said.
Governments will face conflicting demands, under pressure to trim borrowing but also to boost flagging growth prospects by spending money, the IMF said. Debt may increase even faster if there’s no near-term easing of trade tensions, and also because many countries see a need to spend more on defence. For emerging economies, turbulence in the US Treasury markets may also drive up borrowing costs.
“Tighter and more volatile financial conditions in the United States may have ripple effects on emerging markets and developing economies, leading to higher financing costs,” the IMF economists wrote. “This significantly impacts commodity prices, resulting in lower prices and heightened price volatility.”
— Bloomberg.
