WEF president: ‘We haven’t seen this kind of debt since the Napoleonic Wars’

The global economic outlook appears grim, according to the World Economic Forum’s president, Borge Brende.

Brende highlighted concerns about persistently low growth, rising geopolitical tensions, and the need for prudent fiscal measures to avoid recession.

Global debt has reached unprecedented levels, nearing 100% of global GDP, a level not seen since the Napoleonic Wars.

Brende emphasized that governments must address this debt while implementing appropriate fiscal policies to prevent a potential economic downturn.

Stagflation, a combination of slow growth and high inflation, is a significant concern, especially in advanced economies.

Brende also noted that while some near-shoring and friend-shoring may occur, it is crucial to maintain global trade to avoid a prolonged period of low growth.

The International Monetary Fund has acknowledged the elevated global public debt, which stands at 93% of GDP and remains significantly higher than pre-pandemic levels.

China and the United States have particularly high debt burdens, and excessive fiscal spending in the latter has contributed to global inflation and funding cost pressures.

While global growth is projected to reach 3.2% in 2024, a modest increase from previous estimates, Brende emphasized that geopolitical uncertainties pose a significant risk.

Tensions between Iran and Israel, for example, could lead to a sharp spike in oil prices, further damaging the global economy.

Brende stressed the importance of collaboration and dialogue among global leaders to mitigate risks and promote sustained economic growth.

He emphasized the need for responsible fiscal management, addressing climate change, and leveraging technological advancements to harness new opportunities, particularly in the developing world.