Jan 22, 2019

1. The world has been doing little to reduce its debt

Illustration: Lazaro Gamio/Axios

Last year, the world's debt rose to $244 trillion, or 318% of global GDP, the Institute of International Finance (IIF) found.

Backdrop: The two largest contributors to the rise in debt have been emerging market corporate entities and developed market governments.

  • Governments in developed countries like the U.S., Japan and Europe, "have done very little to bring down debt in recent years despite low borrowing costs and the recent pickup in growth, which should have encouraged them to reign in budget deficits," IIF's Managing Director of Policy Initiatives Sonja Gibbs said. "A good example is the U.S., which has not run an annual budget surplus since 2001."
  • The world is now "pushing at the boundaries of comfortably sustainable debt," she says.

Why it matters: In times of economic strength countries have traditionally reduced their debt, seeking balanced budgets and a safety net for the future. But over the past few years the world's largest economies have done just the opposite.

  • The U.S. added close to $2 trillion in fiscal stimulus to its debt, with increased spending and a massive tax cut, in 2017.
  • The euro zone recently ended $2.5 trillion in monetary stimulus, though European Central Bank head Mario Draghi suggested that end may be temporary.
  • Japan just approved an all-time-high $860 billion budget in addition to $3.5 trillion in monetary stimulus from the Bank of Japan.

However, "after two years of solid expansion the world is growing more slowly than expected and risks are rising," IMF Managing Director Christine Lagarde said at the World Economic Forum's opening this week.

Making matters worse: Emerging economies also have borrowed at an unprecedented rate and at a time when global interest rates are rising and the dollar has strengthened, meaning the loans will cost more to pay back.

  • Gibbs and IIF's Emre Tiftik tell Axios that poorer countries in Africa and the Middle East that have borrowed heavily — more than 25% of guaranteed bilateral credit now comes from China, up from less than 1% in 2007 — are some of the institute's biggest worries.

The bottom line: In 2019 the global economy will face stresses it hasn't seen in at least a decade and central bankers and governments globally will be armed with fewer tools to fight them.

Go deeper: The state of debt in 2018

Go deeper

Updated 1 hour ago - Health

World coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Axios Visuals

The number of deaths from the novel coronavirus surpassed 400,000 worldwide on Sunday morning, per Johns Hopkins.

By the numbers: Almost 6.9 million people have tested positive for COVID-19 globally and more than 3 million have recovered from the virus. The U.S. has reported the most cases in the world with over 1.9 million.

George Floyd updates

Protesters gather north of Lafayette Square near the White House during a demonstration against racism and police brutality, in Washington, D.C. on Saturday evening. Photo: Jose Luis Magana/AFP via Getty Images

Tens of thousands of demonstrators have been rallying in cities across the U.S. and around the world to protest the killing of George Floyd. Huge crowds assembled in Washington, D.C., Philadelphia and Chicago for full-day events on Saturday.

Why it matters: Twelve days of nationwide protest in the U.S. has built pressure for states to make changes on what kind of force law enforcement can use on civilians and prompted officials to review police conduct. A memorial service was held for Floyd in Raeford, North Carolina, near where he was born. Gov. Roy Cooper ordered all flags to fly at half-staff to honor him until sunset.

Updated 3 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 3 a.m. ET: 6,898,613 — Total deaths: 399,832 — Total recoveries — 3,087,714Map.
  2. U.S.: Total confirmed cases as of 3 a.m. ET: 1,920,061 — Total deaths: 109,802 — Total recoveries: 500,849 — Total tested: 19,778,873Map.
  3. Public health: Why the pandemic is hitting minorities harder — Coronavirus curve rises in FloridaHow racism threatens the response to the pandemic Some people are drinking and inhaling cleaning products in attempt to fight the virus.
  4. Tech: The pandemic is accelerating next-generation disease diagnostics — Robotics looks to copy software-as-a-service model.
  5. Business: Budgets busted by coronavirus make it harder for cities to address inequality Sports, film production in California to resume June 12 after 3-month hiatus.
  6. Education: Students and teachers flunked remote learning.