The president of the World Economic Forum warned about the massive volumes of debt accumulating globally, comparing it to levels not seen since the Napoleonic Wars over 200 years ago. Borge Brende expressed concern that global debt is nearing 100% of the world’s total economic output.
In an interview with CNBC at a WEF conference in Saudi Arabia, Brende emphasized the need for governments to take fiscal measures to reduce their debts without causing a recession. Despite global growth currently at around 3.2% annually, which is below the long-term trend of 4%, Brende warned of the risk of a prolonged period of low growth similar to the 1970s if trade wars escalate.
The IMF has raised concerns about the soaring U.S. government debt, which could impact global borrowing costs. The Congressional Budget Office predicts that by 2024, U.S. spending on debt servicing will surpass defense outlays, with public debt projected to reach 166% of GDP by 2054.
This mounting debt has raised alarms among financial experts, including BlackRock CEO Larry Fink, Citadel CEO Ken Griffin, and JPMorgan CEO Jamie Dimon, who have highlighted the risks associated with the growing debt levels. The Government Accountability Office also warned of the unsustainable fiscal path the government is on.
