The world's public debt is soaring…. But…
The Covid 19 pandemic put pressure on the world's public finances. States have and still have to spend heavily to manage the health crisis and limit the disastrous impact on the economy in general and in particular on household incomes. The various support plans have reached the astronomical sum of 14 trillion US Dollars (IMF source) or 2,200 billion more since the last evaluation contained in the october 2020 report. The resurgence of the pandemic with the emergence of variants leads to a whole series of new restrictions that require the extension of aid. The crisis has logically caused public deficits to soar The public deficit has reached 13.3% of world GDP compared to 3.3% in 2019. As a percentage of GDP, global public debt has risen from 79.6 in 2012 to 99.5 in projection for 2021.
The deterioration is due to lower revenues and additional expenses. Commodity and oil producers are suffering from collapsing prices. However, the IMF estimates that in 2021 the public deficit is expected to decline at least for developed economies. Its report highlights the positive effect of "debt services that will continue to fall" thanks in particular to very low interest rates. Budgetary support must be maintained until the recovery is significant.
In the United States but also in Europe, India and the rest of Asia, the pandemic weighs heavily in the balance of the various economies. The world's largest economy recorded a 3.5% decline in its activity, its worst result since 1946, with poverty on the rise. Elsewhere, declines are generally noticeable and unemployment is on the rise.
Governments around the world will need to find policies that contribute to a transformation to green, digital and inclusive economies, all within a credible medium-term fiscal framework, especially for countries with high debts.