Geopolitical Disruptions and Debt Sustainability

Geopolitical volatility and risks are on the rise. These risks can materialize with shocks to key economic variables, such as terms of trade, external or domestic demand, or market confidence, impacting economic growth, borrowing conditions, public revenue and spending, and ultimately   public debt. Europe needs to increasingly fend for itself in an increasingly power-based world. Building resilience to shocks, reducing external dependencies, modernizing the production base and spending more on defence come on top of existing long-term challenges such climate change and aging population. Addressing these challenges requires more agile institutions, better coordination of research and innovation, and stronger government support. These challenges, at the same time, come as debt levels are already high, and borrowing costs significantly above the levels seen until before the 2021-22 inflation surges.

Questions for discussions during the conference
What are the main economic impact channels of geopolitical disruptions?
What are the main risks to economic growth and debt sustainability?
What are the policy options?
Do we need new policy instruments to face up to ongoing crises, and to what a volatile environment might bring?