简体中文
The global economy is improving, but the building of global debt remains a big concern, said Jean-Claude Trichet, chairman of the Group of 30 and a former president of the European Central Bank in the 8th Caixin Summit on Wednesday.
After nearly a decade of stagnation, global economic growth is finally starting to recover from its post-crisis slump as measured by credit profiles, growth and debt. The global debt which came from the global financial crisis had been built up across the world after the chaos of the past few years, said Trichet, calling for vigilance against excess leverage.
According to the latest report from the International Monetary Fund (IMF), the global economy is continuing to perform strongly, with Q3 growth stabilizing at levels last seen more than two years ago.
While the global economy appears to be in a sweet spot, political developments are gradually taking center stage, threatening to undermine the current economic momentum.
Along with the fourth round of the North American Free Trade Agreement (NAFTA) negotiations, the Brexit negotiation between the European Union and the United Kingdom, Japanese Prime Minister Shinzo Abe’s landslide victory and the 19th National Congress of the Communist Party of China, developing economies are expected to lead global growth as higher commodity prices and improving fiscal positions will buttress their growth.
Although global economic growth is expected to stay positive, high debt levels and lack of fiscal reform results in countries around the world still face the structural problems which are created by the large growth of the economy.
Worldwide debt has risen to a record high of 226 trillion US dollars, which is more than three times the global annual economic output, and firms in more countries are struggling to service loans, a study shows, just as key central banks prepare to end super-cheap credit policies.
Global debt now amounts to 324 percent of the world’s annual economic output, the Institute of International Finance (IIF) said in a report on Wednesday.
Due to the “lastly excess of leverage”, the deleveraging process of the 2008 global financial crisis was “very important” in helping the world economy recover from the financial meltdown, Trichet said, adding that 25% of the global gross domestic product (GDP) of additional debt was added seven or eight years before the crisis.
“The paradox is that after the crisis, we have continued to have additional leverage coming from both the public and private sectors and have added, from 2008 to 2016, exactly the same amount of global GDP in credit," Trichet said.
(CGTN)
