Global Debt Levels Surpass Highest Level Since Napoleonic Wars – WEF
(30 April 2024 – Global) The World Economic Forum (WEF) has expressed concern about global economic conditions, in particular current debt levels climbing to the highest levels last witnessed during the height of the Napoleonic Wars in the 1820s.
The WEF urged governments to consider how to reduce that debt and take the right fiscal measures without falling into a situation where it triggers a recession. The WEF also lamented persistent inflationary pressures and that generative artificial intelligence (AI) could be an opportunity for the developing world.
The global growth estimate for 2024 is 3.2 percent which is “not too bad” but not what major global economies are accustomed to . Trend growth used to be four percent plus for decades. The WEF also highlighted that there is a risk of a slowdown like that seen in the 1970s in some major economies infamous for a period of damaging stagflation that curtailed economic growth in affected economies for several years.
“We cannot get into a trade war, we still have to trade with each other to avoid a period of low growth. Trade will change and global value chains, there will be some more near-shoring and friend-shoring, but we shouldn’t lose the baby with the bathwater. Then we have to address the global debt situation. We haven’t seen this kind of debt since the Napoleonic Wars, we are getting close to 100 percent of the global GDP in debt” commented WEF President Borge Brende to CNBC’s Dan Murphy.
“The biggest risk for the global economy is now the geopolitical recession that we are faced with including recent Iran-Israel tensions. There is so much unpredictability, and you can easily get out of control. If Israel and Iran escalated that conflict, we could have seen an oil price of US$150 overnight. And that would of course be very damaging for the global economy” Brende added.
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