"The world economy is being tested again with the consequences of the war in the Middle East-and this is a world that has less degrees of freedom as public finances are more stretched in many, many countries."
"Our forecast is that this deficit goes back to around 7.5% and stays there for the near future, with U.S. debt now on track to exceed 125% of GDP this year."
"The adjustment needed to simply stabilize-not reduce-that trajectory would require fiscal tightening of roughly 4 percentage points of GDP. That is not minor, of course."
"These are signs that markets are not as sanguine-as forgiving-as they were in the past."
The International Monetary Fund warns that global public debt will reach 99% of world GDP by 2028, with the U.S. as a prominent example of fiscal issues. The U.S. deficit is expected to stabilize around 7.5% of GDP, with debt potentially exceeding 125% this year. Significant fiscal tightening of about 4 percentage points of GDP is necessary to stabilize this trajectory. Bond markets are showing signs of concern, indicating a shift in investor sentiment towards U.S. Treasuries compared to other advanced economies.
Read at Fortune
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