A chronicler of the underprivileged
Jeremy Seabrook, who dedicated his life to writings which speak for the underprivileged and oppressed people everywhere, is no more. He breathed his last in a care home in London last week.
The recent IMF report presents a mixed picture of the global economy: the immediate threat of recession has receded, and inflation is gradually stabilising, yet a new alarm has been sounded on the surging levels of global debt.
The recent IMF report presents a mixed picture of the global economy: the immediate threat of recession has receded, and inflation is gradually stabilising, yet a new alarm has been sounded on the surging levels of global debt. Projected to exceed $100 trillion in 2024, this debt load represents a critical challenge for economic stability and growth in both advanced and emerging economies. The IMF’s warning is clear ~ without decisive action, the long-term risks to financial stability, economic resilience, and global growth prospects could become overwhelming. While the world avoided a severe economic downturn, the forecasted economic growth rate of 3.2 per cent remains below pre-pandemic levels.
High debt, combined with structural issues such as population aging and underinvestment, threatens to weigh down growth further. Emerging and advanced economies face difficult trade-offs in managing this debt burden, particularly with rising demands on public expenditure to address climate change, security, and healthcare needs. For advanced economies, debt management becomes more complex in the face of the “fiscal trilemma.” The IMF outlines this as the difficulty of balancing high expenditure demands, resistance to tax increases, and the need to maintain economic stability. Without addressing these tensions, the reliance on borrowing can lead to a cycle of increased deficits and escalating debt. The US, UK, and parts of Europe are already facing these pressures as they navigate high expenditure demands with tight fiscal policies. Meanwhile, fluctuations in US monetary policy and bond yields have global ramifications, heightening debt risks for other economies with strong links to US financial markets.
Emerging economies face a different but equally daunting set of challenges. For many, raising public revenue is critical but constrained by large informal sectors and limited tax bases. As the IMF suggests, these countries must expand tax collection and reform revenue administration to reduce reliance on debt financing. At the same time, emerging markets must balance debt management with vital investments in infrastructure, healthcare, and climate resilience to avoid compromising long-term development. The IMF warns that if inflation proves more persistent than anticipated, monetary policy easing could be delayed, which would tighten financial conditions globally. Compounding this, surges in commodity prices due to geopolitical tensions or protectionist policies could strain economies that rely on essential imports.
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In this context, debt vulnerabilities can quickly spiral into financial crises, limiting economies’ ability to recover or invest in growthenhancing sectors. With global debt expected to rise to 100 per cent of GDP by 2030, countries must make strategic policy choices to safeguard their economic futures. Policymakers across the world need to prioritise sustainable investment, pursue prudent debt management, and explore multilateral cooperation to reduce debt vulnerabilities. The IMF’s analysis reminds us that while immediate economic risks may have receded, structural challenges like mounting debt remain as potent threats. They require both foresight and coordinated action to ensure long-term stability and growth.
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