Global borrowing costs rise amid inflation and shifting fiscal landscapes

Global borrowing costs are rising due to inflation shocks and tightening monetary policies by central banks. This trend is placing increased pressure on the finances of highly indebted European nations, with particular attention currently focused on France.

Several factors contribute to rising bond yields, including investor demands for higher interest rates to compensate for inflation risks and increased global competition for capital driven by faster economic growth and investments in defense and infrastructure. Additionally, Japan's shift in investment patterns—moving away from exporting surplus savings to domestic markets as its economy grows—has impacted global borrowing costs.

In Lithuania, Morningstar DBRS has confirmed a stable credit rating outlook, citing steady economic growth, responsible fiscal policy, and moderate debt levels. While these factors help offset risks associated with an increasing budget deficit in the coming year, the agency notes that domestic consumption and investment remain key growth drivers. The International Monetary Fund projects Lithuania's real GDP to grow by 2.8% this year, 2.2% in 2027, and 2.6% in 2028.