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S&P Warns Global Debt Level Would Reach 245% By 2050

11 October 2010 11:17 (UTC +04:00)

Baku - APA-Economics. Absence of appropriate budgetary adjustment, additional reforms to pension and health-care systems, or structural measures to improve sovereigns’ growth potential, will raise future fiscal burden significantly across the world, rating agency Standard and Poor’s said Thursday, RTT News reported.

The projected deterioration in public finances over the period 2010-2050 is particularly significant in advanced economies and emerging market economies in Europe, the rating agency said in a report.

S&P estimates that median general government net debt as a percentage of GDP in 49 countries will be on "explosive" path to almost 245% by 2050, up from below 40% of GDP currently. That compares with 2007 estimate of 148% of GDP. Government spending may rise to almost 60% of GDP in 2050, up from the current level of 44.2%.

The rating agency found that population aging will lead to profound changes in economic growth prospects for countries around the world, alongside heightened budgetary pressures from greater age-related spending needs.