World Leaders Warn of Fragile Global Recovery as Debt and Geopolitical Risks Rise
World leaders and senior policymakers are warning that the global economic recovery remains fragile as rising debt levels, persistent geopolitical tensions, and high interest rates threaten to slow growth across major economies.
Speaking at recent international forums and policy meetings, officials from advanced and emerging economies said the world is entering a more uncertain phase following years of shocks from the pandemic, supply chain disruptions, and ongoing conflicts. While inflation has eased from its peak in several regions, borrowing costs remain elevated, limiting investment and consumer spending.
New economic data from the United States and Europe point to slowing momentum, with weaker manufacturing activity and softer consumer demand. In China, policymakers have acknowledged uneven growth, as challenges in the property sector and subdued domestic consumption continue to weigh on the world’s second-largest economy.
International institutions have also raised concerns about rising public debt, particularly in developing countries. Higher interest rates have increased debt-servicing costs, reducing governments’ ability to invest in infrastructure, health, and social programmes. Some economists warn that without coordinated policy action, vulnerable economies could face renewed financial stress.
Geopolitical risks are adding to the uncertainty. Conflicts in Eastern Europe and the Middle East continue to disrupt trade flows and energy markets, while growing tensions between major powers have raised fears of further fragmentation in the global economy. Energy prices remain volatile, reflecting concerns over supply disruptions and strategic competition.
Central banks are walking a fine line as they assess when to begin easing monetary policy. Officials have signalled caution, stressing that premature rate cuts could reignite inflation, even as growth slows. Markets remain sensitive to any shift in policy guidance, contributing to ongoing volatility in equities and currencies.
Despite the challenges, leaders said a global recession is not inevitable. Labour markets in several advanced economies remain resilient, and inflation trends are broadly improving. However, they cautioned that growth is likely to remain uneven and vulnerable to shocks.
As governments prepare for key economic decisions in the months ahead, calls are growing for stronger international cooperation to address debt risks, stabilise markets, and support sustainable growth in an increasingly complex global environment.
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