VoxTalks Economics
S7 Ep13: Pandemic, war and debt
Mar 15, 2024
Exploring debt sustainability amidst Covid-19 and Ukraine war. Can existing institutions handle it? Analysis of debt burdens in EU countries and necessary fiscal adjustments. Governance reforms in EU and concerns over new legislation. Navigating debt challenges and climate implications. Economic policy shifts and global market impacts.
23:42
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Quick takeaways
- Existing fiscal rules need reform for debt sustainability post-pandemic.
- Debt restructuring strategies should adapt to climate change challenges and China's creditor influence.
Deep dives
Debt Sustainability Challenges due to Covid-19 and the War in Ukraine
The Covid-19 pandemic and the war in Ukraine have exacerbated debt sustainability challenges globally. The primary fiscal balance needed to stabilize debts post-pandemic and war has increased by approximately 1% of GDP. This heightened fiscal pressure is mainly due to higher expected long-term real interest rates which have risen by about 1.5% compared to pre-Covid levels. Growth projections, especially in advanced countries, remain relatively stable, yet long-term growth prospects have decreased in fast-growing emerging markets, adding to the fiscal strain.
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