New Geneva Report on the World Economy - DEBT: THE EYE OF THE STORM

Wednesday, February 9, 2022

The Covid-19 pandemic precipitated a rapid accumulation of debt worldwide, as governments took drastic measures to tackle the public health crisis and to mitigate the ensuing economic dislocation. Coming at a time when global debt was already at historically high levels, concerns exist that the situation could become unmanageable and serve as a prelude to economic, financial, social and political instability.

The 24th Geneva Report addresses these growing concerns over the levels of debt in the world today and offers analysis on what it portends. Encouraged by the relative economic calm two years into the pandemic, and the strength of structural factors to keep debt servicing costs low and manageable, the principal message is that whilst there exist serious areas of vulnerability, as well as significant uncertainties, there are several reasons to be optimistic. 

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The report, authored by Laurence Boone, Joachim Fels, Òscar Jordà, Moritz Schularick and Alan M. Taylor focuses on several major themes, covering public, household, corporate debt, the outlook for the Chinese economy and inflationary risks. It argues that the pessimism surrounding global debt needs to be tempered by the circumstances which have led to the large debt boom. 

You can also read a VoxEU column here