Increasing debt to boost economies obsolete & serves to widen gap between rich and poor – Putin

Increasing the debt burden cannot be used as a way of fostering economic growth any more, Russian President Vladimir Putin said Wednesday, addressing a virtual meeting of the World Economic Forum.

According to Putin, post-crisis economic recovery is tough and the world needs new models for boosting growth.

“If 20 or 30 years ago the problem could be solved by means of stimulating macro-economic policy, today these mechanisms have reached their limits,” he said.

Fueling of economic growth by means of traditional expansion of private debt is currently becoming “essentially impossible, while quantitative easing is only blowing up the bubble of financial assets,” leading to a wider gap between the rich and the poor, according to the Russian president.

Putin added that globalization has led to a significant increase in the profits of large multinationals and, above all, American and European companies, with just one percent of the world’s population benefiting.

“Over the past 30 years, real incomes of people living in most of the developed countries have stagnated while the cost of education and health services has increased. Millions of people, even in rich countries, no longer see the prospect of boosting their incomes,” Putin said.

The Covid-19 pandemic has only exacerbated the problems and imbalances that have already accumulated in the world, according to the Russian president, who noted that last year the global economy saw the biggest decline since World War II.

“The labor market lost around 500 million jobs, and even though half of them were restored, the remaining 250 million is still a very worrying number,” Putin said, also pointing out that incomes declined by $3.5 trillion in just nine months of 2020.

“This number keeps increasing, and that means that the social strain keeps increasing as well,” Putin said.

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