Chalmers’ broken budget rule is a slippery slope in a world of debt
Australia is better positioned than most countries because it has relatively moderate federal debt levels. But the picture is not so benign once ballooning state government debts are added.
As investors and economic policymakers fret about Donald Trump’s trade war, another lurking danger is creeping onto the financial risk radar. A global government debt crisis is a tail risk with potentially colossal costs.
Government debt in wealthy countries is projected to hit $US59 trillion ($94 trillion) in 2025 or 85 per cent of GDP, nearly double the 2007 level, according to the Organisation for Economic Co-operation and Development’s global debt report. That’s near the super-high debt-to-GDP recorded in 1945 when countries built up huge borrowings to pay for World War II.
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John Kehoe is economics editor at Parliament House, Canberra. He writes on economics, politics and business. John was Washington correspondent covering Donald Trump’s first election. He joined the Financial Review in 2008 from Treasury. Connect with John on Twitter. Email John at jkehoe@afr.com
