The global economy has likely been spared a US debt default. It still faces a mountain of risks | CNN Business

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'There is already evidence that economic growth is stuttering in the United States and China — the world’s number one and two economies,' writes Hanna Ziady | Analysis

US lawmakers in the House of Representatives passed a bipartisan bill Wednesday to raise the debt ceiling and allow the government to continue to pay its bills. It still requires the approval of the Senate, but the risk of a catastrophic default that could have sparked a global market meltdown has all but disappeared.

At the same time, interest rate hikes make loans and mortgages more expensive, which weighs on spending by businesses and households. The effect of higher borrowing costs has yet to be fully realized. In a report Wednesday, Deutsche Bank said a wave of defaults among US and European companies was “imminent” because of the tightest monetary policy in 15 years, combined with high debt levels and lower profitability. Deutsche’s analysts said the wave would not peak until late 2024.

 

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