BEIJING, CHINA – NOVEMBER 13: Illuminated skyscrapers in the central business district at sunset on November 13, 2023 in Beijing, China. (Photo by Gao Zehong/VCG, Getty Images)
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The head of the Institute of International Finance warned on Tuesday that policymakers need to quickly address record levels of global debt, describing the emerging crisis as a “huge fiscal problem”.
IIF CEO Tim Adams spoke with CNBC’s Sylvia Amaro at the World Economic Forum in Davos, Switzerland, and sounded the alarm about rising debt levels.
His comments came as the rise of artificial intelligence and conflicts in the Middle East and Ukraine were high on the forum’s agenda, largely overshadowing the WEF’s annual general meeting, which runs until Friday. .
“We have a global debt problem. We have the highest level of debt in any non-war period in modern history, and that debt extends to businesses, households, sovereigns and sub-sovereigns. [levels]” Adams said.
“We have major financial problems everywhere, including in the United States, where we operate. [a] The deficit is 7% of GDP. We need to be frugal and focus on how to rebuild our finances,” he added.
Major industry groups in the global banking industry Said At the end of last year, global debt reached a record level of $307.4 trillion in the third quarter of 2023, with significant increases in both high-income countries and emerging markets.
The IIF predicts that global debt will reach $310 trillion by the end of 2023, with elections in more than 50 countries and territories this year potentially leading to a shift toward populism that will further increase debt levels. I warned you that there is.
“I worry about geopolitics every day,” Adams said. “I think this is going to be a challenging year.”
Asked if the world’s high levels of public debt were a problem now that major central banks were poised to cut interest rates, Adams said: “Demographics are the problem. From China to all of Europe, the world’s The population is aging rapidly in many regions.” To America and Japan. ”
“We need to build that capacity and deal with that huge debt overhang going forward. And since these are normal times, the question is how do we do this quickly and in a smart way. But if we all We need to focus on fiscal consolidation.” Unbalanced. ”