Borge Brende Warns Decade of Low Growth without Economic Action amid High Debt Levels

Borge Brende, president of the World Economic Forum (WEF), has warned that the world is facing a decade of low growth unless appropriate economic measures are implemented. Speaking at WEF’s “Special Meeting on Global Collaboration, Growth and Energy for Development” in Saudi Arabia, he highlighted concerns over global debt ratios which have not been seen since the 1820s. Brende suggested that a trade war must be avoided to prevent stagnating economies such as those of the seventies occurring once more while encouraging “more near-shoring and friend-shoring” in international trading relationships. He also emphasised the need for governments worldwide to address their debts without triggering recessionary conditions, considering persistent inflationary pressures at the same time. The WEF’s Brende remarked that excessive global debt had not been witnessed since Napoleonic times, with figures currently standing close to 100% of GDP. He furthermore raised concerns over “stagflation” risks for advanced economies and highlighted recent Iran-Israel tensions as the biggest risk facing the world economy at present due to their potential impact on oil prices. These warnings echo those made by the International Monetary Fund (IMF) in a report published recently, which noted that global public debt had risen to 93% of GDP last year and was still nine percentage points higher than pre-pandemic levels; it also projected that figures could near 100% of GDP by the end of this decade. The IMF’s report further highlighted high debts in China and the United States, with loose fiscal policy in America putting pressure on rates and the dollar which then pushes up funding costs worldwide – exacerbating pre-existing fragilities. Last month (May 2023), however, the International Monetary Fund marginally raised its global growth forecast for this year to 3.2%, stating that the world economy had proven “surprisingly resilient” despite inflationary pressures and monetary policy shifts. It now predicts a slightly higher level of global economic expansion (3.2%) in 2024, up by just 0.1 percentage points from its earlier forecast made in January this year. Brende additionally commented that “the geopolitical recession we are faced with” was the biggest risk for the world economy at present due to a lack of predictability and potential escalation between Israel and Iran which could lead to oil prices reaching $150 per barrel instantaneously – significantly harming the global economy as well.