Global Debt Is Returning to its Rising Trend
IMF Blog, September 13, 2023
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- Authors: Vitor Gaspar, Marcos Poplawski-Ribeiro, Jiae Yoo
- Published: September 13, 2023
Key findings on global debt levels and trends
- Total debt stood at 238 percent of global gross domestic product last year, 9 percentage points higher than in 2019.
- In US dollar terms, total debt amounted to $235 trillion, or $200 billion above its level in 2021.
- Global public debt declined by just 8 percentage points of GDP over the last two years, offsetting only about half of the pandemic-related increase.
- Private debt (household and non-financial corporate) declined by 12 percentage points of GDP over the last two years, but the decline did not erase the pandemic surge.
- Global public debt tripled since the mid-1970s to reach 92 percent of GDP (or just above $91 trillion) by end-2022.
- Private debt tripled to 146 percent of GDP (or close to $144 trillion) between 1960 and 2022.
Regional and sectoral drivers
- China played a central role in increasing global debt in recent decades as borrowing outpaced economic growth.
- China’s total debt is $47.5 trillion in dollar terms, while the United States’ total debt is close to $70 trillion.
- Debt as a share of GDP in China has risen to about the same level as in the United States.
- China’s share of non-financial corporate debt is 28 percent, the largest in the world.
- Debt in low-income developing countries rose significantly in the last two decades from lower initial levels; private debt in these countries remains on average relatively low compared to advanced and emerging economies but has increased rapidly since the global financial crisis.
- More than half of low-income developing countries are in or at high risk of debt distress.
- About one fifth of emerging markets have sovereign bonds trading at distressed levels.
Forces shaping recent debt dynamics
- Despite a rebound in economic growth since 2020 and much higher-than-expected inflation, public debt remained stubbornly high.
- Fiscal deficits remained substantial as many governments increased spending to boost growth and respond to food and energy price spikes while ending pandemic-related fiscal support.
Policy recommendations to tackle debt vulnerabilities
- For private sector debt:
- Vigilant monitoring of household and non-financial corporate debt burdens and related financial stability risks.
- For public debt vulnerabilities:
- Build a credible fiscal framework to guide balancing spending needs with debt sustainability.
- For low-income developing countries:
- Improve the capacity to collect additional tax revenues (as discussed in the April Fiscal Monitor).
- For those with unsustainable debt, pursue a comprehensive approach that encompasses fiscal discipline as well as debt restructuring under the Group of Twenty Common Framework when applicable (as noted in the April World Economic Outlook).
- Additional policy measures:
- Reducing debt burdens to create fiscal space and allow new investments that foster economic growth.
- Implement reforms to labor and product markets to boost potential output at the national level.
- Enhance international cooperation on taxation, including carbon taxation, to alleviate pressures on public financing.
Vitor Gaspar, Marcos Poplawski-Ribeiro, Jiae Yoo — Global Debt Is Returning to its Rising Trend (September 13, 2023).
Content in this bundle
- 2023 09 2023 Global Debt Monitor
- Chapter 3