Recently, analysts have been widely discussing the swelling US public debt. Somehow they overlook another issue – the growing global sovereign debt.
According to Janus Henderson, the global government debt will soar by 9.5% by the end of this year. If this scenario comes true, then in late 2022, the reading may set a new historical high of $71.6 trillion. The US, China, and Japan are the countries with the biggest volumes of government borrowings. However, given the current circumstances, the vast majority of countries will be forced to increase their borrowings "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," Bethany Payne, the portfolio manager for global bonds at Janus Henderson, said.
Last year, global government debt surged by 7.8% and amounted to $65.4 trillion. At the same time, debt servicing costs fell to a record low of $1 trillion. With the effective interest rate on all the world's government debt, it dropped to 1.6%. In 2022, Janus Henderson expects an increase in debt servicing costs by 14.5% to $1.16 trillion.