‎“Standard & Poor’s”: Raising interest rates may increase ‎borrowing costs globally by $8.6 trln

Standard & Poor’s credit rating agency reported that central banks’ decisions to raise interest rates may result in borrowers incurring $8.6 trillion in additional debt service costs over the coming years.

The agency warned of a slowdown in global economic activity as a result of the increase in borrowing costs

Major central banks had decided to raise interest rates by 2,700 basis points during 2022 to curb high inflation.

In the same context, these increases in interest rates and borrowing costs raise fears of the global economy falling into recession.

The agency says in a report that these concerns may also trigger a financial crisis, which requires the need to strike a balance between spending and saving. ‏

It should be noted that the S&P agency built estimates of the expected incremental borrowing costs of about $8.6 trillion on an interest rate increase of 3% to an estimated global debt of about $300 trillion.

The agency also predicted that the global debt-to-GDP rate in the worst-case scenario would reach 391% by 2030 from 349% in June 2022.