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Payments of interest are swallowing most of the economic production of rich peoples since at least 2007, surpassing the consumption on defense and housing, according to OECD data.
Cost of debt service as a percentage of GDP for 38 Oecd The countries climbed to 3.3 percent in 2024, which is a sudden increase of 2.4 percent in 2021, according to Thursday in a report on a global debt of the group. In contrast, the World Bank estimates that the same group spent 2.4 percent of GDP on its Dugice 2023.
Interest costs were 4.7 percent of GDP USA, 2.9 percent in the UK and 1 percent in Germany.
Borrowing costs have increased in recent months because bond investors have been undergoing permanent inflation in large economies and growing editions because many governments expand consumption on defense and other fiscal stimuli policies.
The OECD warned that the double hit of growing yields and growing indebtedness risked “limiting capacity for future borrowing at a time when the investment needs are greater than ever.” He emphasized “severe prospects” for global debt markets.
Sovereign borrowing A group of high-income countries is expected to reach a fresh record of $ 17 in 2025, compared to $ 16 in 2024 and 14tn in 2023, the OECD report states. This wave of debt issuance has encouraged concern about sustainability in countries like the UK, France and even USA.
The very large burden of debt “was not negative,” said Carmine di Noia, director of OECD for financial and entrepreneurial questions.
However, a lot of borrowings have been spent in the last 20 years to recover from the 2008 financial crisis and Pandemia Covid-19, he added, claiming that “now he needs to be switched from recovery to investment”, such as infrastructure spending and climatic projects.
“Borrowing must increase growth” so that governments can eventually “stabilize and actually reduce the ratio of debt and GDP,” De Noia said.
But the picture is complicated Higher bond yieldswhich makes a more expensive refinancation of an existing debt.
The report states that almost 45 percent of the debt would be matured by 2027. “There were a lot of issuance in favorable conditions,” Di Noia said, adding that these conditions changed to the worse.
Adding expensive debt servicing conditions is a variable profile of government bonds, OECD said. While policy creators take place programs for emergency bonds, Central Bank Holdings Government Bonds fell by $ 3 cm from its top 2021, and is expected to fall for another $ 1 N this year.
This means that private investors – who Di Noia said were “more sensitive to the price” – invent the difference. Sensitivity leaves publishers open to instability and makes them more exposed “increased geopolitical and macroeconomic insecurity,” he added.
