He International Monetary Fund reported Wednesday that global debt as a percentage of economic output fell significantly in 2022 for the second year in a row, but the decline could be coming to an end as the post-global economic crisis growth rebound fades.
The IMF said in an update to its Global Debt Database that the world’s total debt-to-GDP ratio fell last year to 238% from 248% in 2021 and 258% in 2020.
But the decline of the past two years, driven by strong growth and higher-than-expected inflation, has recovered only about two-thirds of the crisis-induced surge in global debt. COVID. The ratio remains well above the 2019 level of 238% of GDP.
China has played a central role in rising global debt in recent decades, as borrowing outpaced economic growth, and its debt burden has defied the moderating trend, growing to 272% of GDP in 2022 from 265. % in 2021.
These levels are similar to those of USAwhich saw its debt/total GDP ratio fall to 274% in 2022 from 284% in 2021, according to the IMF report.
The world has been on a debt “roller coaster” for three years, but debt is likely to rise again in the medium term, and the IMF urged governments to adopt strategies to help reduce debt vulnerabilities, both in the public debt as in the debt of households and the debt of non-financial companies.
“The rebound in real GDP growth is fading. Inflation is expected to stabilize at a low level in the medium term”said the IMF.
“If global debt resumes its upward pace in the future, the debt roller coaster since pandemic will appear to be nothing more than a temporary deviation around its long-term upward trend.”
Source: Gestion
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