A
mosaic
collection
of
world
currencies.
FrankvandenBergh
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The
world
is
looking
at
a
debt
crisis
that
will
span
the
next
10
years
and
it’s
not
going
to
end
well,
economist
Arthur
Laffer
has
warned,
with
global
borrowings
hitting
a
record
of
$307.4
trillion
last
September.
Both
high-income
countries
as
well
as
emerging
markets
have
seen
a
substantial
rise
in
their
debt
piles,
which
has
grown
by
a
$100
trillion
from
a
decade
ago,
fueled
in
part
by
a
high
interest
rate
environment.
“I
predict
that
the
next
10
years
will
be
the
Decade
of
Debt.
Debt
globally
is
coming
to
a
head.
It
will
not
end
well,”
Laffer,
who
is
President
at
investment
and
wealth
advisory
Laffer
Tengler
Investments,
told
CNBC.
As
a
share
of
the
global
gross
domestic
product,
debt
has
risen
to
336%.
This
compares
to
an
average
debt-to-GDP
ratio
of
110%
in
2012
for
advanced
economies,
and
35%
for
emerging
economies.
It
was
334%
in
the
fourth
quarter
of
2022,
according
to
the
most
recent
global
debt
monitor
report
by
the
Institute
of
International
Finance.
watch
now
To
meet
debt
payments,
it
is
estimated
that
around
100
countries
will
have
to
cut
spending
on
critical
social
infrastructure
including
health,
education
and
social
protection.
Countries
that
manage
to
improve
their
fiscal
situation
could
benefit
by
attracting
labor,
capital
and
investment
from
abroad,
while
those
that
do
not
could
lose
talent,
revenue
—
and
more,
Laffer
said.
“I
would
expect
that
some
of
the
bigger
countries
that
don’t
address
their
debt
issues
will
die
a
slow
fiscal
death,”
Laffer
said,
adding
that
some
emerging
economies
“could
quite
conceivably
go
bankrupt.”
Mature
markets
such
as
the
U.S.,
U.K.,
Japan
and
France
were
responsible
for
over
80%
of
the
debt
build-up
in
the
first
half
of
last
year.
While
in
the
case
of
emerging
markets,
China,
India
and
Brazil
saw
the
most
pronounced
increases.
The
economist
warned
that
repaying
the
debt
will
become
more
of
an
issue
as
population
in
the
developed
countries
continues
to
age
and
workers
become
more
scarce.
“There
are
two
main
ways
to
cover
this
issue:
raise
taxes
or
grow
your
economy
faster
than
debt
is
piling
up,”
he
said.
Laffer’s
comments
come
on
the
heels
of
the
U.S.
Federal
Reserve’s
decision
to
leave
rates
unchanged
in
January,
and
shooting
down
hopes
of
a
rate
cut
in
March.
