Debt & GDP - what happens when one default?
Over the course of the last 2 years, governments of the world had to pump in "money" to protect their economies from collapse. As a result, most countries are facing record-high inflation in recent times. Debt has been incurred as they raised the funds to battle Covid and save their economies. Debt to GDP ratio is a metric looked upon by analysts when coming to how countries were able to pay off their debt. Extract from VisualCapitalist: Global debt reached $226 trillion by the end of 2020 , seeing the biggest one-year increase since World War II. Borrowing by governments accounted for slightly over half of the $28 trillion increase, bringing global public debt ratio to a record of 99% of GDP. As interest rates rise, IMF officials warn that higher interest rates will diminish the impact of fiscal spending, and cause debt sustainability concerns to intensify . “The risks will be magnified if global interest rates rise faster than expected and growth falters,” the ...