英文【世界經(jīng)濟(jì)論壇】望報告：首席經(jīng)濟(jì)學(xué)家展

CentrefortheNewEconomyandSociety

ChiefEconomistsOutlook

September2024

ChiefEconomistsOutlook

Disclaimer

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2

ChiefEconomistsOutlook

ChiefEconomistsOutlookSeptember2024

Thisquarterlybriefngbuildsonthelatestpolicydevelopmentresearchaswellasconsultationsandsurveyswithleadingchiefeconomistsfromboththepublicandprivatesectors,organizedbytheWorldEconomicForum’sCentrefortheNewEconomyandSociety.

Itaimstosummarizetheemergingcontours

ofthecurrenteconomicenvironmentand

identifyprioritiesforfurtheractionbypolicy-

makersandbusinessleadersinresponseto

thecompoundingshockstotheglobaleconomyfromgeoeconomicandgeopoliticalevents.

ThesurveyfeaturedinthisbriefngwasconductedinAugust2024.

3

Contents

Executivesummary 5

1.Turbulentcrosswinds 7

Hopingforasoftlanding 7

Monetarypolicyturningacorner 11

2.Abrewingstorm 14

Debtdynamicsdarken 14

Fiscalpolicychallenges 16

3.Betterbalancedgrowth 19

Theprospectsforanewgrowthagenda 19

References 23

Contributors 27

Acknowledgements 28

Cover:Gettyimages

4

Executivesummary

TheSeptember2024ChiefEconomists

Outlooklaunchesamidcontinuingeconomicuncertainty.Theshort-termoutlookfortheglobaleconomyhasbeguntostabilize,butmanyvulnerabilitiesremain.Amajorityofthechiefeconomistssurveyed(54%)expecttheconditionoftheglobaleconomytoremain

unchangedoverthenextyear,butfourtimesasmanyexpectconditionstoweaken(37%)ratherthantostrengthen(9%).

Therearereasonsforcautiousoptimism,

notablyincludingacontinuedgradual

easingofinfationratesandashifttoloosermonetarypolicy.However,theprolonged

sluggishpaceofglobalgrowth,compoundedbyheightenedpoliticalvolatility,leavesmanycountriesvulnerabletoeconomicshocks.

Chiefamongthecurrentsourcesof

uncertaintyistheUSpresidentialelectioninNovember.Eightoutof10chiefeconomistsagreetheUSelectionresultwillhavea

signifcantimpactoneconomicpolicy

globally.AgainstabackdropofheightenedsuperpowertensionsbetweentheUSandChina,geopoliticalandgeoeconomicrisksarealsoincreasing.

Theregionaloutlookremainsvaried.SouthAsiaisaclearstand-outperformer,with

sevenoutof10chiefeconomistsexpectingstrongorverystronggrowthin2024and

2025.TheoutlookfortheUSeconomyisbroadlypositive,withalmostnineoutof10chiefeconomistsexpectingmoderateorbettergrowthoverthesameperiod.

Bycontrast,almostthree-quartersof

respondentsexpectonlyweakgrowthin

Europethisyearwithamodestimprovement

in2025.InChina,almostfourin10

respondentsexpectweakorveryweakgrowthboththisyearandnext.

Accordingtoamajorityofthechief

economistssurveyed,publicdebtburdens

representathreattomacroeconomicstabilityinbothadvanced(53%)anddeveloping

(64%)economies.Risingdebt-servicingcostshaveledtoafscalsqueeze,and3.3billion

peoplenowliveincountriesthatspendmoreondebtinterestthanoneducationorhealth.

Lookingtotheyearahead,amajorityof

respondentsnotethatcurrentdebtdynamicsaregoingtounderminegovernmentefforts

toboostgrowthandleavecountriespoorly

preparedfornexteconomicdownturn.

Moreover,thediffcultfscalpositionthat

manycountriesareinmeanstheyarelikely

tostruggletopreparefornumerousstructuralchangesthatareunderway,includingthe

energytransition,demographicshiftsandevolvingnationalsecurityneeds.

Policy-makersfacethetwinchallengeof

drivinghigherratesofeconomicgrowth

whilealsotryingtoinfuenceitsstructural

character:makinggrowthlessdamagingto

theenvironment,forexample,orlesslikelytoleadtosectionsofsocietybeing“l(fā)eftbehind”.Aroundtwo-thirdsofthechiefeconomists

agreethatpolicy-makersshouldprioritize

economicgrowth,withasimilarproportion

agreeingthatprogressonothergoalsmust

bemade,evenifthisexertsadragongrowth.

5

However,thereisdeeppessimismonthecurrentsituation,withonly12%ofchiefeconomistsagreeingthatpolicy-makersarecurrentlydoingwellatdelivering

balancedgrowth.

Twomainobstaclestomakingprogressonmorebalancedgrowtharehighlightedbythechiefeconomists:alackofpoliticalconsensusorwill(citedby91%)anda

lackofglobalcollaboration(67%).Onthefrstofthese,respondents’viewseemstobethattheproblemisoneofleadership

ratherthanbroadopposition.Onthe

second,thereislittleprospectofashort-termturnaround,aslargemajoritiesofthechiefeconomistsexpecteffortstoboost

globalcollaborationtobeunderminedbothbydomesticpoliticaltrends(83%)andbygeopoliticaltensions(91%).

6

ChiefEconomistsOutlook

1.Turbulentcrosswinds

Hopingforasoftlanding

Theshort-termoutlookfortheglobaleconomyisstabilizingbutmany

vulnerabilitiesremain,accordingtothelatestWorldEconomicForumsurvey

ofchiefeconomists.Whileamajorityofrespondents(54%)expecttheconditionoftheglobaleconomytobeunchangedoverthenextyear,fourtimesasmanyexpectconditionstoweaken(37%)

ratherthanstrengthen(9%).

Figure1.Theglobaleconomicoutlook

Lookingattheyearahead,whatareyourexpectationsforthefutureconditionoftheglobaleconomy?

MuchweakerSomewhatweakerUnchangedSomewhatstrongerMuchstronger

37549

Shareofrespondents(%)

Note:Thenumbersinthegraphsmaynotaddupto100%becausefgureshavebeenroundedup/down.

Source:ChiefEconomistsSurvey.(2024,August).

Therearereasonsforcautiousoptimism,

suchasaneasingofinfationandevidenceoftheresilienceofglobalcommercedespitethedramaticshocksofrecentyears.1Yet,

iftheeconomyisstabilizing,itisdoingso

attheweakestlevelindecades,withthe

InternationalMonetaryFund(IMF)projectingthatglobalgrowthwilleasefrom3.2%in

20242to3.1%in2029.3Thisweakness,compoundedbypoliticalvolatilityinmanycountries,posesnumerousthreatsin

theyearsahead.Forexample,itcouldhindertheeffectivedevelopmentand

implementationofpolicyonahostofissues.Itwillalsoleaveeconomiesmorevulnerabletoeconomicshocksthanmightotherwise

bethecase.

Theextentoffnancialmarkets’nervousnessaboutsuchshockswasdramatically

highlightedinearlyAugust2024.Stock

marketstumbledinresponsetoaninterestrateriseinJapanandanuptickinUS

unemploymentthatwaswidelyinterpretedasheraldingarecession.Overthecourseofafewdays,theS&P500indexdroppedby

1Beattie,A.(2024,August).

2InternationalMonetaryFund(IMF).(2024,July).

3InternationalMonetaryFund(IMF).(2024a,April).

7

morethan5%,whileJapan’sTOPIXslumpedbymorethan20%.4Meanwhile,theVIX–

commonlyregardedasagaugeofinvestornervousness–hitapeakof65.73on5

August,alevelnotseensincetheoutbreakofthepandemicinearly2020.5

BythemiddleofAugust,theseinitial

responseshadbeenreversedtoasignifcantextent.6Withhindsight,themarketresponse,particularlytotheUSlabourmarketupdate,appearstohavebeenanover-reaction.7

Amongthechiefeconomists,expectationsoflabourmarketlooseninginmostadvancedeconomieshadalreadypickedupin

recentmonths,from31%ofrespondentsintheAprilsurveyto57%inthelatest

survey.Nevertheless,USfnancialmarketsremainedjittery,andinearlySeptember,asell-offfocusedonhigh-techstockswasexacerbatedbyanothersubduedsetof

monthlylabourmarketdata.8

Theissueappearstobethatuncertaintyandcomplexityarebothexceptionally

highatpresentandafteryearsofdramaticeconomicdisruptionsandpolicyresponses,evenseasonedmarketparticipantsare

strugglingtocalibratetheirresponsestothelatestdevelopments.

Moreover,marketturmoilinAugustwas

triggeredbyarelativelyminorchange.

Whatdoesthatsuggestaboutthelikely

responseifamuchmoresubstantial

disruptionweretohit?Thereisnoshortageofpotentialshocks.Chiefamongthemis

theUSpresidentialelectioninNovember.

Eventhoughthetwocandidates’policy

platformshaveyettobefullyfeshedout,

theelectionmarksapoliticalandeconomicinfectionpointfortheUSandtheworld.

Thisisrefectedintheresultsofthelatest

surveyofchiefeconomists.Eightoutof

10respondentsagreedtheelectionresultwillhaveasignifcantimpactoneconomicpolicyglobally,whilerisksassociated

withtheelectionrecurredfrequentlywhenrespondentswereaskedabouttheirworriesfortheyearahead.

Figure2.USelections

Lookingattheyearahead,doyouagree/disagreewiththefollowingstatements?

StronglydisagreeDisagreeUncertainAgreeStronglyagree

TheresultoftheforthcomingUSelectionwillhaveasigni?cantimpactoneconomicpolicyglobally

11940

40

Shareofrespondents(%)

Source:ChiefEconomistsSurvey.(2024,August).

4TheEconomist.(2024,September).

5O’Connell,B.etal.(2024,August).

6Aquilina,M.etal.(2024,August).

7Edwards,W.(2024,August).

8Stafford,P.&NeilAlim,A.(2024,September).

8

Geopoliticaltensionsareanotherpotential

sourceofmacroeconomicshocksand

werecitedrepeatedlyasaconcernbythe

chiefeconomists.Againstabackdropof

heightenedsuperpowertensionsbetweentheUSandChina,geopoliticalandgeoeconomicrisksareincreasing,includingrisksofwar.9

Theglobaleconomyhasmanagedtoadapttonumerousgeopoliticaldisruptions,butthisisnotacost-freeprocess.10Forexample,

thelatestWorldInvestmentReportcites

worseninggeopoliticaltensionsasoneofthekeydriversofa10%slumpinglobalforeigndirectinvestmentlastyear.11Morerecently,shippingcostsbetweenEastAsiaandNorthEuropemorethandoubledbetweenApril

andJuly2024followinganintensifcationofattacksonshipsintheRedSea.12

Thechiefeconomists’outlookfortheglobaleconomyissubjecttosignifcantregional

variation(Figure3).ThestrongestresultsinthelatestsurveyareforpartsofAsia.SouthAsiaisaclearstand-outperformer,with

sevenoutof10chiefeconomistsexpectingstrongorverystronggrowthin2024and

2025.Thisrefectsthecurrentbuoyant

economicactivityinIndia,wheretheIMF

recentlyreviseditsforecastforGDPgrowththisyearfrom6.8%to7.0%.13

TherearealsorobustresultsforCentral

AsiaandEastAsiaandPacifc.The

overwhelmingmajorityofrespondents

expectmoderateorstrongergrowth,withasizeableminorityofbetweenone-ffthand

one-thirdexpectingstrongorverystrong

growthinthetworegionsboththisyearandnextyear.Bycontrast,theweakoutlook

forChinacontinuestomakeitanoutlieramongtheAsianeconomies.Almostfourin10respondentsexpectweakorveryweakgrowthinChinain2024and2025.Thisextendsaprotractedrunofsluggishresults,refectingthecountry’scontinuingstruggles,particularlywithdefationary

pressuresandwidespreaddysfunctioninthepropertymarket.14

Thechiefeconomists’expectationsfor

theUSeconomyarebroadlypositive,with

almostnineoutof10expectingmoderate

orbettergrowththisyearandnext.This

isconsistentwiththeviewthattheUS

economyisexperiencingasoftlanding,

despiteitsprotractedperiodoftightmonetarypolicyandrecentstringoflabourmarket

disappointments.15Giventhattherehasbeenamarkedrecentpatternofweakconsumersentimentdespiterelativelyrobusthard

data,16itisnotablethattherearenowsignsthatconsumerconfdenceispickingup.17

Europeistheregionallaggardonceagain,withalmostthree-quartersofrespondentsexpectingweakgrowththisyear.Numerousfactorsarecontributingtotheregion’s

sluggishness,andpoliticaluncertaintyin

numerouscountries–notleastintwoof

theregion’slargestcountries,GermanyandFrance–makesitaparticularchallenge

toformulateaneffectiveandconsistent

9Gill,I.&Kose,A.(2024,January).

10UnitedNationsConferenceforTradeandDevelopment(UNCTAD).(2024,July).

11UnitedNationsConferenceforTradeandDevelopment(UNCTAD).(2024a,June).

12Strauss,D.(2024,July).

13InternationalMonetaryFund(IMF).(2024,July).

14Leahy,J.(2024,August).

15FinancialTimes.(2024,August).

16McLeod,S.(2024,April).

17TheConferenceBoard.(2024,August).

9

response.Germany,inparticular,hasbeenadragonrecentgrowthacrosstheregion;inthesecondquarterof2024,itseconomycontractedforthefourthtimeinthelasttwoyearsby0.1%quarteronquarter.18However,

thechiefeconomistsaremodestlyoptimisticthatconditionsinEuropearesettoimprove,withalmosttwiceasmany(53%)expectingmoderateorbettergrowthin2025asin

2024(29%).

Figure3.Growthexpectations

Whatisyourexpectationforeconomicgrowthinthefollowinggeographies?

VeryweakWeakModerateStrongVerystrong

SouthAsia

EastAsiaandPaci?c

CentralAsia

UnitedStates

MiddleEast

andNorthAfrica

Sub-SaharanAfrica

LatinAmerica

andtheCaribbean

China

Europe

2024

29

61

10

2025

3

26

55

16

2024

3

63

33

2025

3

70

233

2024

11

68

184

2025

4

67

264

2024

11

66

23

2025

15

71

15

2024

3

31

48

17

2025

34

48

17

2024

4

41

44

11

2025

4

26

52

19

2024

37

60

3

2025

26

71

3

2024

6

31

54

9

2025

3

35

59

3

2024

3

69

263

2025

47

50

3

Shareofrespondents(%)

Source:ChiefEconomistsSurvey.(2024,August).

18StatistischesBundesamt.(2024,August).

10

ChiefEconomistsOutlook

Intheotherregionscoveredinthesurvey,theoutlookiseithersteadyorpositive.Growth

perspectivesarepositivebutremainuncertainfortheMiddleEastandNorthAfrica.TheIMFprojectsgrowthfortheMiddleEastandNorthAfricatorisefrom2.2%in2024to4.0%

in2025.19Almosthalfofchiefeconomists

expectgrowthtoremainmoderate,but

twiceasmanyexpectittobeweakrather

thanstrong,aviewechoingconcernsaboutinstabilityintheregion.Sub-SaharanAfrica

looksequallypoisedtosurpassglobalgrowthaverages,withgrowthforecastscomingin

at4.1%(upfrom3.7%in2024).20Theshareofchiefeconomistswhoexpectmoderate

orstrongergrowthinthisregionincreases

from55%in2024to71%in2025.InLatin

AmericaandtheCaribbean,overtwo-thirdsofchiefeconomistsexpectmoderategrowth,slightlyupfrom2024.At2.7%in2025(up

from1.9%in2024),theIMFalsoprojectsgrowthinthemoderaterange.21

Monetarypolicyturningacorner

Globalinfationiscontinuingitsdownwardtrajectory.Thepaceofdecelerationis

easingandtherearebothcountriesand

categoriesofgoodsandserviceswhere

infationarypressuresareprovingstubborn,butoveralldevelopmentsfortheglobal

economyarepositive.Whenaskedaboutthepotentialmacroeconomicdevelopmentsthatmadethemhopefulfortheyearaheadchiefeconomistsfrequentlycitedtheeasingofinfation.

ThelatestIMFprojectionshowsfull-yearglobalinfationfallingfrom6.8%in2023to

5.9%in2024,withasharpdivergencein

expectationsbetweenadvancedeconomies(2.7%)anddevelopingeconomies(8.2%).22Forbothgroups,IMFprojectionsremain

signifcantlyabovepre-pandemiclevels

(1.4%and5.1%,respectively)23andaWorldBankblognotesthatinfationratesremainabovetargetin40%ofthecountriesthat

haveinfationtargets.24Itisnotsurprising,therefore,thatwhileashifttoamore

accommodatingmonetarystancehasstartedtooccur,itissomewhatpatchyandvariedinitstiming.

Forexample,theeasingofinterestratesintheUSwasdelayedinthefrsthalfoftheyearowingtostubborninfationarypressures,particularlyforso-called

“supercoreservices”,asub-categoryof

servicesthatexcludesenergyandhousing

andthatincludesmanysectorswherepricesaretiedcloselytoconditionsinthelabour

market,suchascleaning,childcareand

hairdressing.25InJune2024,whiletheoverallUSrateofconsumerpriceinfationstood

at2.5%,therateforsupercoreserviceswas3.3%.26

Thelatestsurveyofchiefeconomists

suggestsasoliddegreeofconfdencethattheUShasturnedacorneroninfation,withtheproportionofrespondentsexpecting

highinfationdroppingfrom21%in2024

tojust6%in2025.Inbothyears,the

largeproportionexpectingmoderate

infationremainedunchangedat65%.In

Europe,thereisaverysimilarpattern,withexpectationsofhighinfationdroppingfrom21%thisyearto3%nextyear.

19InternationalMonetaryFund(IMF).(2024,July).

20Ibid.

21Ibid.

22Ibid.

23InternationalMonetaryFund(IMF).(2024a,April).

24Jongrim,HA.etal.(2024,August).

25Anstey,C.(2024,June).

26FederalReserveBankofSt.Louis.(2024,August).

11

Figure4.Infationexpectations

Whatisyourexpectationforinfationinthefollowinggeographies?

2024

39

55

2025

74

2024

55

35

2025

13

68

2024

20

48

32

19

69

2024

23

58

81

2024

22

63

21

68

2024

65

2025

26

65

2024

21

59

2025

35

59

2024

50

43

46

46

2024

33

2025

16

53

31

VerylowLowModerateHighVeryhigh

LatinAmerica

andtheCaribbean

SouthAsia

Sub-SaharanAfrica

CentralAsia

MiddleEast

andNorthAfrica

UnitedStates

Europe

EastAsiaandPaci?c

China

6

6

19

10

19

2025

12

19

2025

15

4

15

2025

11

15

21

3

6

21

3

3

7

2025

7

42

213

Shareofrespondents(%)

Source:ChiefEconomistsSurvey.(2024,August).

EvenforSouthAsia,whererespondents

aremostoptimisticaboutgrowth,thereisamarkedimprovementininfationexpectationsbetween2024and2025.Unsurprisingly,theregionswherethegrowthoutlookisweakestalsohavethemostpronouncedexpectationofdisinfation.InLatinAmericaandthe

Caribbean,theproportionofrespondents

expectinghighinfationdroppedsharplyfrom2024to2025from55%to19%,whilein

Sub-SaharanAfrica,therewasadeclinefrom32%to12%.

InChina,consumerpriceinfationhasnot

surpassed1%sinceFebruary2023and

hasturnednegativemultipletimessince

then.27InJuly,theinfationratepickedupto0.5%,28butthesamemonthsawanannualfallof0.8%inproducerprices,29whichcanoftenprovideanearlysignaloffuturetrendsforconsumerprices.Nevertheless,thereissomeoptimismfromthechiefeconomists,withahalvingoftheproportionexpecting

verylowinfationinChina,from33%in2024to16%in2025.

27NationalBureauofStatisticsofChina.(2024a,August).

28Ibid.

29NationalBureauofStatisticsofChina.(2024b,August).

12

Giventhisglobalbackdrop,itisnotsurprisingthatthelatestsurveyofchiefeconomists

pointstoagenerallooseningofmonetary

policyoverthenextyear(Figure5).This

isparticularlytruefortheUS,Europeand

China,buteveninregionswhereonlya

minorityexpectloosening,theoutlookisforratestoholdunchangedratherthanincrease.Thehighestproportionofrespondents

expectingtightermonetarypolicyinany

regionisforEastAsiaandPacifc(15%),

refectingtheuniquecircumstancesofJapan.

ThetimingandpaceofUSinterestrate

cutsremainthefocusofgreatattention,

buttheFederalReserveisfarfromthefrst

majorcentralbanktomove.RefectingthecomparativeweaknessofeconomicactivityinEurope,theEuropeanCentralBank30andtheBankofEngland31cutratesby0.25

percentagepointsinJuneandAugust,

respectively.ChinaalsoannouncedmodestcutstoarangeofpolicyratesinJulyto

bolstersentimentandactivity.32However,Japanhasbeenamonetaryoutlierfor

decades,andthispatternshowsnosignofchanging:whiletherestoftheworld’smajorcentralbankshavebeenfocused

oncalibratingtheirmonetaryloosening,attheendofJuly,theBankofJapanraisedinterestratesforonlythesecondtime

in17years.33

Figure5.Monetarypolicyoutlook

Lookingattheyearahead,whatisyourexpectationformonetarypolicyinthefollowinggeographies?

LooserUnchangedTighter

Europe

Asia

Central

8

China

UnitedStates

16

84

46

9

91

46

EastAsiaandPaci?c

MiddleEastandNorthAfrica

9

91

South

Asia

4

32

64

15

30

56

LatinAmericaandtheCaribbean

10

5534

4

35

62

Sub-SaharanAfrica

4

36

60

Shareofrespondents(%)

Source:ChiefEconomistsSurvey.(2024,August).

30EuropeanCentralBank.(2024,August).

31BankofEngland.(2024,August).

32Leng,C.&Hale,T.(2024,July).

33BankofJapan.(2024,July).

13

2.Abrewingstorm

Debtdynamicsdarken

Persistentlyweakgrowthexacerbatesthe

risksposedbycountries’debtlevels,whichhaveincreasedsignifcantlyoverthelast

fveyears.Intheviewofamajorityofthe

chiefeconomistssurveyed,publicdebtlevelsareathreattomacroeconomicstability,

bothinadvanced(53%)anddeveloping(64%)economies.

Concernsaboutgrowingpublicdebt

burdenshavebeenelevatedforsometime,

buttheyhavebecomemoreprominent

asdebtratioshaveworsenedandas

electionsaroundtheworldhavehighlightedpoliticaltensionsaroundtheneedforfscal

consolidation.Moreover,thisyearhasalreadyseenevidenceofthepotentialfordramatic

societalconsequenceswhendebtlevelsareeconomicallyunsustainable.UnrestinKenyainJune,inwhichmorethan20peopledied,haditsrootsinadebtcrisisthatsawinterestpaymentsswelltoabsorbalmost60%of

totalgovernmentrevenues.34

Figure6.Debtrisks

Lookingattheyearahead,doyouagree/disagreewiththefollowingstatements?

StronglydisagreeDisagreeUncertainAgreeStronglyagree

Currentsovereigndebtlevelsrepresentathreattomacroeconomicstability

*Emerginganddevelopingeconomies

Advanced

121818476

E&D*

31221586

Shareofrespondents(%)

Source:ChiefEconomistsSurvey.(2024,August).

In2023,globalpublicdebtasaproportionofGDPstoodat93.2%,upfrom84.2%

in2019.35Thisjumpislargelyarefection

ofthefscalimpactofthepandemic,but

itisnotablethatdebt-to-GDPratiosfellin2021-22beforethetrendreversedlastyearaseconomicreboundeffectssubsidedandgovernmentrevenuesfell.TheIMFexpects

furtherslippagethisyear,inpartbecauseitisanelectionyearinsomanycountries,andelectionstendtoleadtoalooser

fscalstance.36

Thelevelandpaceofchangeindebt

levelsdiffersignifcantlybetweenadvancedeconomiesanddevelopingones.

34TreasuryofKenya.(2024,January).

35InternationalMonetaryFund(IMF).(2024b,April).

36Ibid.

14

Intheformer,thepublicdebtburden

increasedfrom103.9%to111.0%between2019and2023,althoughtherearesome

notableoutliers,suchastheUS(122.1%in2023),Italy(137.3%)andJapan(252.4%).37Amongemerginganddevelopingeconomies(E&D),wheredebtisasourceofmuch

greatereconomicinstability,debtlevelsare

loweronaveragebuthaveincreasedmore

rapidly,from55%in2019to68.0%in2023.38

However,acountry’slevelofdebtisjust

onepartoftheequation.Debtsustainabilityisdeterminedbytheinteractionoffour

elements:growthrates,debtlevels,interestratesandtheprimarybalance(governmentrevenueslessspending,excludingoutlaysondebtservicing).39

Eachoftheseelementsisasourceofstrainatpresent.Asdiscussedintheprevious

section,themacroeconomicoutlookisfor

persistentlysluggishgrowthrates.Regardingtheprimarybalance,theevidencesuggeststhatcountriesareslipping.According

totheIMF,theproportionofadvanced

economieswithprimarybalancesbelow

debt-stabilizationlevelsjumpedfrom11%

in2022to32%in2023,withanequivalentincreasefordevelopingeconomiesfrom20%to41%.40In2023,therewere16developingcountriesindebtdistress,upfromfve

in2016.

Meanwhile,thecombinationofelevated

debtlevelsandhighinterestrateshas

pushedinterestpaymentsintoeconomicallydamagingterritoryformanycountries.

Thereare54developingcountriesthat

spendmorethan10%oftotalrevenueson

debtservicing,and3.3billionpeoplelivein

countriesthatspendmoreondebtinterest

thanoneducationorhealth.41Evenadvancedeconomiesareseeingtheprofleofpublic

spendingbeingsignifcantlyaffected:intheUS,thecostofdebtservicing($870billion)isprojectedtosurpassthecountry’sdefencespending($822billion)thisyear.42

Thisprocessoffscalspacebeingsqueezedasresourcesareredirectedtowardsdebt

servicingisincreasinglywidespread.Amorestarkpotentialoutcomeofprolongeddebt

unsustainabilityisdefault,oracountry’s

failuretomeetatleastpartofitsdebt-

servicingobligations.Thesurveyofchief

economistspointstoasignifcantdifferenceinthelikelihoodofariseindefaultsoverthenextyearbetweenadvancedanddevelopingeconomies.Only9%expectdefaultstopickupintheformer,butthisfgurejumpsto39%forthelatter.Ifdefaultsdooccur,thechief

economists’expectationofcontagionto

othercountriesisslightlyhigherforadvanced(62%)thanfordevelopingeconomies(59%).Thisisprobablyarefectionoftheextentof

theshockthatwouldberequiredtotrigger

advanced-economydefaultsinthefrstplace.

37InternationalMonetaryFund(IMF).(2024b,April).

38Ibid.

39Adrian,T.etal.(2024,March).

40InternationalMo