Recent assessments from the Organisation for Economic Co-operation and Development (OECD) indicate a continued strong likelihood of low global economic growth in the near future, with a forecast of 2.7% in 2023 and 2.9% in 2024.

Factors such as declining energy prices, positive market sentiment, the earlier-than-expected recovery of the Chinese economy from the post-pandemic period, and the reopening of economies are listed as key drivers positively impacting global growth.

The issue of global inflation, meanwhile, will remain a prominent concern for the world economy. While developed countries focus on improving headline inflation, the ongoing rise in core inflation raises significant worries. Inflation is projected to reach 6.6% in 2023 and 4.3% in 2024. The persistence of inflation rigidity beyond expectations may lead to market fluctuations in the future, potentially exerting a negative impact on growth.

The ongoing Russia-Ukraine war poses another critical risk to the global economy and exacerbates the persistent global inflation rigidity. OECD economists emphasize the need to maintain a tight monetary policy until signs of reduced inflationary pressures, particularly addressing the resolution of rigidity. Alongside this perspective, experts from the OECD Finance Directorate raise warnings and signals concerning public debt levels among the 38 OECD member countries.

As of today, the public debts of OECD countries exceed $50 trillion, while the ratio of public debts to the total gross domestic product (GDP) of 38 countries has exceeded 80%. In 2023, compared to 2022, the need for new borrowing increased significantly because of re-borrowing or refinancing rather than due to public debts and increasing budget deficits and public expenditures.

This year, the public debt ratio with less than three years to maturity has reached 30% for all OECD countries. When considering 2024 and 2025, it reaches 50%, indicating a substantial need for risky and high-volume debt renewals. This means a need for a very risky and high amount of public debt renewal. On top of that, as some economists continue to insist that the leading central banks should maintain their "tight monetary policy" stance for the sake of prioritizing the fight against inflation, this situation brings with it a high-interest rate risk for the public side, along with a high rollover ratio brings. In fact, the average borrowing rate of OECD countries has increased from 1.4% in 2022 to 3.3% due to the growing global need for public borrowing and monetary tightening policies.

State of Türkiye

The "negative rate" bonds issued just a few years ago no longer exist today. While the average of public debt securities carried in the balance sheet by the central banks of OECD countries to support the governments is at the level of 25%, the same ratio in the balance sheet of the Central Bank of the Republic of Türkiye (CBRT), which is claimed by some "precise" neoliberals to not be "tight" in monetary policy, is considerably lower than the OECD average, at the level of approximately 4%.

Considering this, experts highlight the inevitable need for a change in the investor base for new public bond issuances, as some economists advocate for stricter monetary policies by the U.S. Federal Reserve (Fed) and the European Central Bank (ECB), seemingly overlooking the ongoing public borrowing needs of the United States and European Union (EU).

Türkiye, considering its long-term fiscal obligations, stands out among the few OECD countries fortunate enough to implement a more targeted budgetary policy. It remains to be seen how those facing difficulties will navigate these challenges and solve their dilemmas.