Global public debt levels (including debts of countries, corporations, and households) have dangerously and unprecedentedly increased in recent years, reaching $307 trillion in the third quarter of 2023. This amount represents 336% of the global gross domestic product, more than three times what the global economy generates. The reasons behind this significant rise in public debt include high costs associated with combating the COVID-19 pandemic over the past years, substantial trading in financial markets, increased government spending in many countries, as well as unprecedented interest rate hikes over the past year, during which global public debt grew by approximately $10 trillion.
This substantial rise in public debt poses a major challenge to the global economy, forcing countries, companies, and individuals to limit spending and investment, which implies a slowdown in economic growth. Additionally, this reality could push some debtors into default, increasing the risks and repercussions of a global financial crisis, especially as the value of servicing this debt continually rises to very high levels.
Country debts represent a large portion of global public debt, with data from the Institute of International Finance indicating that government debts reached $87.3 trillion, posing a threat to all countries, including advanced ones. More than 100 countries will be compelled to reduce their spending on infrastructure, health services, education, and social protection, particularly as over 60% of countries classified as low-income are facing significant difficulties in managing their debts.
The main challenge is whether there is a solution to the global debt problem. Despite efforts by economists and politicians, the outlook remains unclear. If serious measures are not taken to address this issue, there is a substantial risk to the stability of the global financial system, particularly given the severe repercussions of the Zionist aggression against the Gaza Strip, which has caused risks to shipping movements in the Red Sea; leading to increased shipping costs, in addition to the significant losses incurred by companies supporting the Zionist entity.
The continuous and significant rise in public debt serves as a red flag to the world, reminding us of the necessity to control debt and steer economies towards financial sustainability. Governments, international institutions, and corporations must work together to find innovative solutions to this growing financial problem before it leads to a major crisis threatening global stability.
