(Finance) – According to S&P estimates, thesovereign debt will remain elevated and reach i 10.5 trillion dollars in 2023, almost 40% higher than the historical average prior to the COVID-19 pandemic. Developed countries in Europe and Latin America will record the most significant increase in debt due to stagnant growth and budgetary pressures, also due to high energy prices. TO level globalS&P expects the Net cost of energy-related fiscal measures will reach the considerable figure of $1.65 trillion in 2022-2023 (1.7% of world GDP).
The report pointed out that policies monetary more restrictive and more prolonged they will keep sovereign borrowing costs at levels not seen in the past decade, more than doubling the cost of issuance for advanced sovereigns and keeping it high for sovereigns in emerging markets.
The 30 Villages Europeans developed with S&P ratings will issue approximately $1.75 trillion in gross trade debt in the long term, 348 billion more than in 2022. The high stock debt, large fiscal deficits, exchange rate and inflation effects, as well as shrinking cash reserves, explain why gross issuance remains high this year. 2023 also marks the transition from QE to QT, which means that i European government bonds they will have to rely on commercial creditors to absorb 100% of the new supply, which will put fiscal plans under greater scrutiny especially as 2024 approaches.
However, the increase of taxi market is reflected only gradually in the increase of costs tax for the payment of interest. Indeed, as a percentage of GDP, the debt rollover to 2023 for the five largest developed European government issuers in absolute terms (UK, Italy, Germany, France and Spain) remains just over 11% of GDP. The most notable exceptions are theItaly and the Kingdom Unitedwhere inflation-linked and floating-rate instruments as a percentage of total debt are higher than in other countries.
As the global interest rate cycle reverses, S&P expects i markets emerging EMEA (EM) will modestly grow long-term commercial gross debt in 2023, likely to $434.9 billion for the year. Changes in US monetary policy remain a key risk to EM funding conditions, as does related currency volatility.
The stock of commercial debt of EMEA issuers is expected to reach $2.9 trillion equivalent (36.1% of GDP) by the end of 2023, a record high in dollar terms but still below the peak of 43.4% in terms of GDP recorded during the pandemic. Egypt will likely remain the largest emerging issuer of commercial debt in EMEA, with Turkey not far behind.