The interest load has exploded on the whole world, Fitch Ratings has announced serious numbers
The international credit rating agency announced that, according to its calculations, members of the portfolio of economies it has designated as sovereign debtors can expect interest costs of about $2,300 billion on their sovereign debt stock in 2023 as a whole.
According to Fitch’s sector analysis, this is a result of the fact that the interest expense of advanced industrial economies has increased by 47 percent since 2020, and the sovereign interest burden of emerging economies has also increased by 40 percent. And the company emphasizes: this growth process suggests that, at least in the case of highly developed economies
The era of low inflation and exceptionally low interest rates is over.
The credit rating agency indicates that the annual interest costs of the advanced economies that recorded them in the national debt rating were quite stable in the range of $900-1000 billion in the period 2007-2021, even with the fact that the average level of the national debt-to-GDP ratio in this group has increased by about 20 percentage points in the same period.
According to Fitch Ratings, last year’s interest rate increases linked to global inflationary pressures will affect most of the world’s sovereign debtors. At the same time, interest costs in advanced economies are increasing at a greater rate than in emerging economies, as the highly industrialized region has largely used the advantages of lower credit costs, according to the credit rating agency’s sector analysis Thursday.
According to Fitch, the divergence is also explained by the fact that many central banks in the emerging region are expected to maintain their base rates at their current level in the second half of this year, as these central banks started significant monetary tightening cycles earlier than central banks in the developed region.
Interest cost operations in the developed region are heavily influenced by the United States, the world’s largest issuer of public debt. Interest expenses for the US federal government in the 12-month period ending in June were $616 billion., and exceeded $600 billion annually for the first time – according to a Fitch Ratings study. And the credit rating agency confirms that the cost of interest on the US national debt for a period of 12 months exceeded $ 500 billion for the first time only eight months ago, last November.
At the same time, in the advanced industrial region, the increase in the interest burden on the British public debt is particularly surprising.
Britain’s sovereign interest costs were 117 billion pounds (51,000 billion HUF) in the 12 months to May, double what they were in the year to September 2021, according to Fitch’s sector analysis.
According to the latest data For the first time in more than six decades, the British public debt-to-GDP ratio has risen above one hundred percent. The British Office of Statistics (ONS) announced the other day that at the end of May, the net public debt stock was £2,567.2 billion, which corresponds to the ratio of net public debt to GDP of 100.1 percent.
According to a series of retrospective data from the ONS, Britain’s public sector debt burden, measured as a proportion of GDP, was higher than that in March 1961: at that time, the net public debt ratio was measured at 102.5 per cent.
Cover image source: Shutterstock