Investors should weigh hit of high government debt on markets
History shows previous waves of rapid escalation have ended in financial crises
After a big decline between February and June, consensus forecasts for global growth have stabilised, recent data suggests. Global equity markets have therefore continued their recovery path, fuelled by central banks lowering rates and the gradual reopening of some economies after lockdowns.
Though the pace of central bank monetary policy easing has stabilised, unprecedented fiscal support and falling government revenues have led to sharply wider fiscal deficits in several economies. The world is now awash with debt issued mainly by governments. It is tempting to believe that these high debt levels are sustainable indefinitely due to the current record low-interest rates...
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