WEF President Warns of Debt "At Post-Napoleonic War Levels... Concerns Over Low Growth"

"This is a level of debt not seen since the Napoleonic Wars." Børge Brende, President of the World Economic Forum (WEF), pointed out the rapidly increasing debt problem and warned that if countries do not take action, they could face low growth over the next decade.

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Attending the WEF Riyadh Special Meeting held in Saudi Arabia, President Brende appeared on CNBC on the 28th (local time) and stated, "Governments need to find ways to reduce debt and take proper fiscal measures without falling into a recession-inducing situation." He expressed concern, saying, "We have not seen this level of debt since the Napoleonic Wars," and "The world is carrying debt close to 100% of global Gross Domestic Product (GDP)."

This aligns with a recent International Monetary Fund (IMF) report that warned last year that global public debt had expanded to about 93% of GDP. This is 9 percentage points higher than the pre-pandemic level. In particular, the IMF pointed out the high debt levels in countries such as the United States and China, diagnosing that their fiscal policies are putting pressure on interest rates and the dollar. This analysis suggests that financing costs worldwide are rising and vulnerabilities could increase further.

President Brende also expressed concerns about trade wars. He said, "Trade wars should not happen, and we must continue trading," adding, "While changes in trade are expected due to near-shoring and friend-shoring, we must not throw out the baby with the bathwater."

Brende’s warning is that without resolving these trade conflicts and debt issues, an era of low growth is inevitable. He said, "The estimated global growth rate this year is about 3.2%, which is not bad, but it is not the level we are accustomed to," noting that "the growth trend over decades has been 4%." He also pointed out concerns about stagflation?rising prices amid recession?in some advanced economies.

Geopolitical risks originating from the Middle East were also cited as the greatest threat to the global economy. President Brende said, "The uncertainty in forecasts is too great," adding, "If the conflict between Israel and Iran escalated, oil prices could have surged to $150 overnight. This would deal a significant blow to the global economy."

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