The risk of a U.S. debt default. adding to the problems faced by a slowing global economy, with rising interest rates and high debt levels already stifling the investment needed to drive higher output, World Bank President David Malpass said on Friday.
Group of Seven (G7) finance officials meeting in Japan discussed the "very high importance" of raising the U.S. debt limit. and avoid the negative impact of a possible U.S. government debt default. for the first time
U.S. Treasury Secretary Janet Yellen on Friday reiterated that failure of Congress to raise the $31.4 trillion debt limit would result in economic and financial catastrophe. At the same time urging the Republican-controlled House of Representatives to agree to lift the federal debt limit.
Malpass said there was discussion during the G7 meeting about the need to boost productivity and growth, and also address the high outstanding debt faced by more and more countries.
Global growth is expected to fall below 2% in 2023, and could remain low for several years, he said. One of the big challenges is that advanced economies have taken on so much debt that it takes a lot of capital to pay it off, leaving too little investment for developing countries, he said.
