‘A slow fiscal death' awaits some countries in this ‘decade of debt,' says economist Art Laffer

The world is facing a looming debt crisis that is expected to last for the next decade, warned economist Arthur Laffer. Global debt reached a record high of $307.4 trillion in the third quarter of 2023, with significant increases seen in both high-income countries and emerging markets. Laffer predicts that the next 10 years will be marked by a surge in debt and warns that it will not end well. The debt-to-GDP ratio has risen to 336%, compared to 110% for advanced economies in 2012 and 35% for emerging economies. As countries struggle to meet debt payments, around 100 nations may have to reduce spending on essential social infrastructure. Laffer believes that countries failing to address their debt issues could face severe consequences, while those that improve their fiscal situation may benefit by attracting investments and labor. Mature markets like the U.S., U.K., Japan, and France contributed to the majority of the debt accumulation, while countries such as China, India, and Brazil experienced significant increases in emerging markets. Repaying the debt will become more challenging as populations age and the workforce diminishes. Laffer suggests that raising taxes or achieving faster economic growth are two potential solutions.