The IMF just published its Global Economic outlook update with an interesting subtitle: Divergent and Uncertain. And the only thing we can add is, indeed. Projected growth for 2025 and 2026 is 3.3%, below the 3.7% the world experienced from 2000-2019. But there’s more: as you can see below, global debt has climbed to and astonishing $315Tn, which represents 333% of global GDP. A big portion of the growth we have experienced in the recent past, was merely a manifestation of the debt governments (and corporations) were injecting in the system. An optimist will claim that the debt to GDP level is lower than it was, and that means we can confront the debt level. But that’s not entirely true; the main reason that happened rests on the fact that from 2021 till last year, the world experienced high inflation, high enough to repressed debt, which does not adjust up with inflation, and makes the ratio look better. But it also makes consumers poorer. Over the next few decades, the divergent part will kick in: most nations will have to adjust their belts and implement austerity or devalue their currency, while others, the most technologically advanced, will increase productivity growth and will be able to escape the debt trap, provided the economic growth is paired with fiscal discipline.
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Como siempre, muy asertivo y con visión de medio plazo.
SGS