“We have not seen this level of debt since Napoleon”

The economy is growing with some intensity, although below the historical average, but The threats are also greater than in recent decades. This is one of the main conclusions of the special meeting of the World Economic Forum on Global Collaboration, Growth and Energy for Developmentwhich began yesterday in Saudi Arabia and will continue

The economy is growing with some intensity, although below the historical average, but The threats are also greater than in recent decades. This is one of the main conclusions of the special meeting of the World Economic Forum on Global Collaboration, Growth and Energy for Developmentwhich began yesterday in Saudi Arabia and will continue until today, in a few days in which a good part of the conversations center around the war situation in the Middle East. Specifically, the president of the World Economic Forum, Borge Brendepointed out yesterday at this meeting that “We have not seen such a high debt since the Napoleonic Wars, it is close to 100% of world GDP.”

“The global growth forecast for this year is around 3.2%. It’s not bad, but it’s not what we were used to, the growth trend has been around 4% for decades,” Brende said yesterday, and later went on to give the bad news: the risk of slowdown that could lead to “stagflation like that of the 70s” in some developed economies, a possible trade war and the constant rise of global debt. “We cannot enter into a trade war, we have to trade with each other,” he said in reference to the causes of this possible stagflation. “Trade will change, as will global value chains, there will be more nearshoring and friend-shoring“, but that should not mean losing all types of commercial ties with distant or less friendly countries. And, Once growth is assured, “we will need to address the global debt situation. We have not seen this type of debt since the Napoleonic wars, we are approaching 100% of the world’s GDP in debt.” Therefore, Brende said that governments must consider how to reduce that debt and take the correct fiscal measures without falling into a situation in which a recession begins. Separately, he also noted persistent inflationary pressures and that generative artificial intelligence could be an opportunity for the developing world. Likewise, the president of the World Economic Forum pointed out that the Middle East “has been going through a tough period” since the beginning of the war in Gaza, where “the humanitarian situation is very difficult”, so a good part of the conversations try to how to reduce the escalation of war in the area.

In addition, the director of the International Monetary Fund (IMF), Kristalina Georgieva, participant in the conference, demanded a pact between advanced economies and developing countries. “Poor countries must do their part. They must collect taxes, fight corruption, improve the quality of their spending and demonstrate that they are committed to their own people”Georgieva noted. In return, rich countries must respond with “a large amount of international aid for debt restructuring,” among other aspects. “It is time to recognize that we are on a boat together.”