Global debt tops $365 trillion as economists sound alarm over 'vicious cycle'
- Global debt has surpassed $365 trillion worldwide, according to CNBC World.
- Interest payments by advanced economies now exceed the world’s total spending on defense and clean technology.
- Economists warn that rising debt creates a "vicious cycle" that pressures fiscal budgets and raises borrowing costs.
- The trend signals increasing risks for public and private sectors as debt levels approach unsustainable thresholds.
Global debt has surpassed $365 trillion, prompting economists to warn of a "vicious cycle" that could strain fiscal stability, CNBC World reported. The figure reflects the combined borrowing of governments, corporations, and households across the world.
In advanced economies, interest payments on debt now exceed the total global spending on defense and clean technology. This stark comparison highlights how much of public and private resources are locked into servicing existing obligations rather than investing in growth or security initiatives.
The concern stems from the fact that as debt grows, so do the interest obligations that must be met each year. Higher payments can crowd out other spending, forcing governments to raise taxes or cut services, which in turn may dampen economic activity and make it harder to generate the revenue needed to service debt. The resulting pressure can lead to higher borrowing costs and a higher risk of default, especially in economies with weaker fiscal positions.
Policymakers will need to balance the need for investment with the imperative to keep debt at sustainable levels. The trajectory of global debt in the coming years will shape not only interest rates but also the capacity of governments and businesses to respond to future economic shocks.
