The global debt burden decreased for the second year in a row, even though it remains above its already-high pre-pandemic level, according to the latest update of the International Monetary Fund’s Global Debt Database in September 2023.
The total debt stood at 238% of global gross domestic product in 2022, 9 percentage points higher than in 2019. In US dollar terms, debt amounted to $235tn, or $200bn above its level in 2021.
Despite the economic growth rebound from 2020 and much higher-than-expected inflation, public debt remained stubbornly high. Fiscal deficits kept public debt levels elevated, as many governments spent more to boost growth and respond to food and energy price spikes even as they ended pandemic-related fiscal support.
China key reason
China played a central role in increasing global debt in recent decades as borrowing outpaced economic growth. Debt in low-income developing countries also rose significantly in the last two decades, albeit from lower initial levels.
Even as their debt levels, especially private debt, remain on average relatively low compared to advanced and emerging economies, the pace of their increases since the global financial crisis has created challenges and vulnerabilities.