The world in Debt: The world’s debt hits record $281 Trillion and it’s set to rise again in 2021.
The World’s debt hits a record $281 trillion at the end of 2020.
The record rise in debt can be attributed to the nerve wrecking COVID-19 pandemic and economists predicts the likelihood of more debt.
Governments, companies and households raised $24 trillion last year to offset the pandemic’s economic toll, bringing the global debt total to an all-time high of $281 trillion by the end of 2020, or more than 355% of global GDP.
Despite the vaccine roll out, the low central bank policy rate are keeping debt issuance above pre-pandemic levels. Governments with a lot of deficits are set to increase debt by another $10trillion this year, pushing their debt load past $92 trillion by end-2021, as both political and social pressures make it hard to stop spending.
Analysts states that designing a sustainable exit strategy from these extraordinary fiscal measures would be pretty difficult. Both developed and developing markets will be searching for a perfect balance.
While an economic recovery may lead some governments to start developing strategies to reduce stimulus, but doing so too soon could increase default and bankruptcy risk and waiting too long could lead to more debt loads.
Based on these, what do you think should be the next step for central banks and world leaders. How do you think the World can come out of this fix it has been placed in by the pandemic.