## Persistent Fall in Private Borrowing Brings Global Debt Down

_IMF Blog, December 2, 2024_

## Source details

**Canonical URL:** [Persistent Fall in Private Borrowing Brings Global Debt Down](https://www.imf.org/en/blogs/articles/2024/12/02/persistent-fall-in-private-borrowing-brings-global-debt-down)

## Other formats

- [Markdown version](/en/blogs/articles/2024/12/02/persistent-fall-in-private-borrowing-brings-global-debt-down/index.md)
- [Structured JSON version](/en/blogs/articles/2024/12/02/persistent-fall-in-private-borrowing-brings-global-debt-down/index.json)
- [Bundle manifest](/en/blogs/articles/2024/12/02/persistent-fall-in-private-borrowing-brings-global-debt-down/bundle-manifest.json)

## Bibliographic details
- Authors: Vitor Gaspar, Carlos Gonalves, Marcos Poplawski-Ribeiro
- Published: December 2, 2024

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### Key findings and headline statistics
- Global debt decreased about one percentage point to 237 percent GDP.
- Global private debt fell by 2.8 percentage points to 143 percent of GDP, below the 2019 level.
- Non-financial corporations and household global debt remains elevated at more than $150 trillion in 2023.
- The fall in private debt more than compensated for the turning up in public debt reported in the latest Fiscal Monitor.

### Empirical analysis: low growth prospects as the main driver
- Empirical analysis points to low growth prospects as the main driver of the fall in private debt in 2023.
- Behavioral channel: households and firms respond to current and expected future growth; given weak growth prospects many firms and households are opting to pay down debt.
- The reduction in the contribution from unexpected inflation to debt erosion caused the slowdown in the pace of private-debt decline compared to 2022.

### Role of unexpected inflation and recent history
- Surprise inflation was a major factor in 2021-2022: since debt is fixed in nominal terms, unexpected inflation can erode the real value of debt and lower its ratio to GDP.
- In 2022, inflation reached levels unprecedented since the Great Inflation of the 1970s and early 1980s.
- The diminished role of surprise inflation in 2023 reduced this erosive effect on real debt burdens.

### Elasticity of private debt to growth prospects (visualization and interpretation)
- A simple visualization is provided via the elasticity of private debt to the difference between growth prospects and current growth.
- Interpretation: as economic prospects brighten compared to the current situation, households and firms are more inclined to resort to debt financing; deteriorating growth prospects operate in reverse and encourage debt paydown.
- The Global Debt Monitor contains the underlying visual and analysis referenced.

### Addressing private and public debt risks; policy implications
- Financial stability risks and policies to mitigate and manage them are covered comprehensively in the Global Financial Stability Report.
- The combination of high debt and low growth heightens the challenge of balancing the fiscal equation.
- Chapter 3 of the recent World Economic Outlook emphasizes that structural policies are crucial to deliver sustainable and inclusive growth.
- The last Fiscal Monitor argues that, in most countries, additional efforts are necessary now to contain public finance risks with a high degree of confidence.
- Fiscal policy has a central role among structural policies—for example through public investment and policies that support innovation and research—to deliver enduring, sustained, and inclusive growth.

### Event and contributors
- Authors: Vitor Gaspar, Carlos Gonçalves, Marcos Poplawski-Ribeiro
- Date: December 2, 2024
- Moderator: Chris Giles (FT)
- Panelists:
  - Vitor Gaspar (Director, IMF Fiscal Affairs Department)
  - Gian Maria Milesi Ferretti (Senior Fellow, Hutchins Center on Fiscal and Monetary Policy, the Brookings Institution)
  - Luiz Awazu Pereira da Silva (Visiting Professor, University of Tokyo, LSE, and Sciences-Po Paris)
  - Ruth Yang (Managing Director and Global Head of Private Market Analytics, S&P Global)

*Source: Persistent Fall in Private Borrowing Brings Global Debt Down (IMF blog, December 2, 2024).*

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## Content in this bundle

- **GLOBAL DEBT MONITOR — Recent Developments**
  - [GLOBAL DEBT MONITOR — Recent Developments (Markdown version)](/external/datamapper/GDD/2024%20Global%20Debt%20Monitor.pdf.md){rel="alternate" type="text/markdown"}
  - [GLOBAL DEBT MONITOR — Recent Developments (PDF)](/external/datamapper/GDD/2024%20Global%20Debt%20Monitor.pdf){rel="external" type="application/pdf"}

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## References

- [Global Debt Database](https://www.imf.org/external/datamapper/datasets/GDD)
- [Fiscal Monitor](https://www.imf.org/en/Publications/FM/Issues/2024/10/23/fiscal-monitor-october-2024)
- [Global Financial Stability Report](https://www.imf.org/en/Publications/GFSR/Issues/2024/10/22/global-financial-stability-report-october-2024)
- [World Economic Outlook](https://www.imf.org/en/Publications/WEO/Issues/2024/10/22/world-economic-outlook-october-2024)

_Source: https://www.imf.org/en/blogs/articles/2024/12/02/persistent-fall-in-private-borrowing-brings-global-debt-down_