The new global economic crisis will be severe and have a geopolitical impact.

Sputnik - The world is on the brink of an imminent global crisis caused by the excessive ambitions of countries: at the beginning of 2019, global debt reached $244 trillion and continues to grow.

The main problem right now is the prospect of a prolonged deflationary recession and endless economic stagnation, as was the case in Japan in recent decades, Aleksandr Losev, director of an asset management company, told the Kommersant newspaper.

The increased debt burden and the ever-rising cost of maintaining it affect economic growth, increase credit risks and the possibility of payment defaults, which in the future will create difficulties in refinancing debts and slow the credit boom that is currently stimulating global growth, Losev explained.

The financier emphasized that this process will affect the economic situation because it means "fewer new loans and investments, weaker economic growth or even its complete cessation, more moratoriums, payment delays [...], local crises in certain regions and industries that can cause a domino effect and shake not only the financial markets, but also the entire global economy."

According to Losev, a World Bank study showed that when the debt-to-GDP ratio exceeds 77% for an extended period, economic growth slows, and each percentage point of debt above this level costs the country 1,7% of economic growth in developed countries. For developing countries, the situation is even worse: each additional percentage point of debt above the 64% level will reduce economic growth by 2% annually.

According to forecasts from the International Monetary Fund (IMF), the global economy will slow down this year in 70% of countries.

"Many economies are not sustainable enough. High public debt and low interest rates limit their ability to overcome a new recession," said IMF Managing Director Christine Lagarde.

At the same time, the analyst emphasizes that a new crisis could bring about changes in the existing global order.

"A large-scale economic crisis can lead to geopolitical changes and transform the existing world order, which is based on the hierarchical inequality of countries, associated with long economic cycles and technological patterns, as well as an endless accumulation of capital. Russia, as well as most developing countries, is on the periphery of this system," Losev wrote.

The financier predicts that "the current world order will begin to change rapidly not at the moment of crisis, but when countries are unable to coordinate their efforts globally to maintain the current economic and financial system, the principles and rules of international trade, when selfishness prevails but competition is not enough."

This will lead to a time of conflict, a revision of priorities, protectionism, mobilization and reindustrialization, that is, priorities of national production, large-scale projects and the development of science.

Losev advises that we should not forget that, in times of instability, all great powers, by virtue of their position and the interests of their elites, businesses, and capital, try to create their own order and, to a certain extent, are ready to defend this order in various ways, through political and military means.