00:00One of our headline messages for the annual meetings is that debt is high and at this point in time global public debt is rising fast and is projected to go above 100% of global GDP by 2029.
00:19Risks are also on the upside, which means that it's more likely that debt will grow even faster than it is that it will slow down.
00:33Part of the reason for this development is that we have changed the macroeconomic environment quite severely some years ago when interest rates start rising.
00:51For a long period of time debt was rising but interest rates were coming down so that the burden on budgets was more or less steady.
01:02But since 2021 interest rates have increased and from 2023 public debt also turned up.
01:11So we have this coincidence of public debt rising, interest rates rising, the burden of interest payments on budget is increasing as well.
01:23In the world, round numbers, rough numbers, in 2020 the interest bill on budget was about 2% of GDP and now it's approaching 3% of GDP.
01:36It's a very large pressure.
01:39Now, if you look at financial markets right now, you see that assets have their valuations stretched.
01:50You have a situation where spreads are narrow, credit risk spreads are narrow.
01:59In such a situation, financial risks can materialize and in a situation where governments are in a vulnerable position,
02:13one of the scenarios that we worry most about is one in which there is a fiscal, financial adverse feedback loop.
02:26And we have shown some years ago that when countries have fiscal space, they can manage a financial crisis to minimize impacts on employment and economic activity and make sure that the recovery comes fast.
02:44Countries that don't have fiscal space, that don't have fiscal buffers, on the contrary, have to suffer, have to endure falls in employment and economic activity that are much more pronounced and a recovery that takes much longer to come.
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03:03Если Kern natürlichen be tested, make sure they come.
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