According to a new report, global sovereign debt is expected to climb to a whopping $71.6 trillion in 2022, while fresh borrowing is also anticipated to remain high, writes CNBC.
In its second annual Sovereign Debt Index, British asset manager Janus Henderson projected a 9.5% rise in global government debt, driven primarily by the U.S., Japan, and China.
According to the report, global government debt jumped 7.8% in 2021 to $65.4 trillion, while debt servicing costs dropped to $1.01 trillion, an effective interest rate of just 1.6%. However, debt servicing costs are set to rise significantly in 2022, climbing around 14.5% on a constant-currency basis to $1.16 trillion.
“The pandemic has had a huge impact on government borrowing – and the after-effects are set to continue for some time yet. The tragedy unfolding in Ukraine is also likely to pressure Western governments to borrow more to fund increased defense spending,” said Bethany Payne, portfolio manager for global bonds at Janus Henderson.
According to the latest global borrowing report from S&P Global Ratings, new sovereign borrowing is expected to reach $10.4 trillion in 2022, almost a third above the average before the Covid-19 pandemic.
“We expect borrowing to stay elevated, owing to high debt-rollover needs, fiscal policy normalization challenges posed by the pandemic, high inflation, and polarized social and political landscapes,” said S&P Global Ratings credit analyst Karen Vartapetov.