Global Economy News
LAST UPDATE: May 28, 2025
BIS urges governments to curb ‘relentless’ rise in debt
The Bank for International Settlements (BIS) warns that governments must address the unsustainable rise in public debt as higher interest rates make fiscal paths untenable.
Insight
The BIS emphasizes the urgency for fiscal consolidation, highlighting that prolonged high debt levels, coupled with rising interest rates, could destabilize financial markets and erode public trust. The call for action underscores the need for transparent and credible fiscal frameworks to ensure long-term solvency, especially as central banks cannot single-handedly maintain economic stability amid external pressures like aging populations and climate change.
Developing nations face ‘tidal wave’ of China debt: report
A report indicates that the poorest 75 countries are set to make record-high debt repayments to China in 2025, totaling $22 billion.
Insight
The substantial debt repayments to China are straining the finances of developing nations, potentially diverting funds from essential services like healthcare and education. This shift from China being a net lender to a net collector may impact global development efforts and raises concerns about the sustainability of debt-fueled infrastructure projects under initiatives like the Belt and Road. The situation calls for a reevaluation of lending practices and debt management strategies to prevent long-term economic distress in vulnerable countries.
NATO Chief Rutte Says Members Moving Toward 5% Spending Target
NATO Secretary-General Mark Rutte states that alliance members are progressing towards adopting a new defense spending target of 5% of GDP.
Insight
The proposed increase in defense spending reflects growing security concerns, particularly regarding Russia’s actions. While the move aims to bolster collective defense capabilities, it may pose challenges for member countries with limited fiscal space. The shift also indicates a strategic pivot towards enhanced military readiness and infrastructure, potentially impacting domestic budgets and prompting debates on defense priorities versus social spending.
North Korea Says Trump’s Golden Dome Risks ‘Space Nuclear War’
North Korea criticizes President Trump’s proposed “Golden Dome” missile defense system, claiming it could lead to the militarization of space and increase the risk of nuclear conflict.
Insight
The “Golden Dome” initiative, aiming to establish a space-based missile defense system, has drawn sharp criticism from North Korea, which views it as a provocative move that could destabilize global security. The plan raises concerns about an arms race in space and the erosion of existing arms control agreements. The international community faces the challenge of balancing advancements in defense technology with the imperative to maintain strategic stability and prevent the escalation of tensions into potential conflicts.
