Until last June, the United States was ranked fifth among the most indebted countries in the world, based on its gross domestic product. At the time, its national debt was about $31.46 trillion. However, the US Treasury Department recently revealed that its debt amounts to $33.59 trillion.
Ray Dalio, a Bridgewater Associates fund analyst, expects the United States to lose its ability to repay its government debt. Adding to these pressures are increasing interest payments on debt, driven by increasingly high interest rates. The North American country’s net interest payments are estimated to rise from 2.5% to 3.6% of GDP in 2033, while they are expected to rise to 6.7% by 2053.
Italy and the UK are in the spotlight
Italy’s debt amounts to about $2.5 trillion, making it one of the countries with the highest debt burden in the world. This month, Italy’s risk premium rose as authorities cut its economic growth and raised budget deficit forecasts.
On the other hand, public debt in the United Kingdom rose by more than 40%, reaching $3.3 trillion. However, the British Treasury confirmed that it is working to reduce its debt level, as well as develop the national economy through important reforms.
“You can take a lot […] Former European Central Bank chief economist Peter Praet stressed that “countries today will see that we are not very far from a general financial crisis.” Investors are concerned about debt levels, noting that a lack of credibility towards government spending and such strategies may lead to turmoil in the markets. They also stressed that conflicts in Ukraine and the Middle East could aggravate the global economic situation.
(via RT)
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