Global debt is likely to resume its rising trend after a dip last year, the International Monetary Fund warned, due to rebounding economic growth and stable inflation, as well as a sustained issuance of debt by China.
Total debt — government, private business and household — fell 10 percentage points to 238% of global GDP in 2022, the IMF said in its latest update of global debt on Wednesday. Private and government debt both declined from the previous year, with the latter erasing about half of its increase since the pandemic.
“Global debt appears to have returned to its historical upward trend,” the IMF said. “Managing debt vulnerabilities should be key.” “China has been an important force driving global debt in recent decades,” the IMF said in its report. “The rise in China’s debt ratio to GDP was unparalleled in other large economies.”China’s debt-to-GDP ratio has grown from about 70% in the mid-1980s, when it was near the average for most emerging economies, including a “considerably steeper” climb since 2009.
The IMF highlighted how government spending has left businesses and households with lighter liabilities on their balance sheets than before the Covid-19 pandemic. In many countries, especially in advanced economies and emerging markets excluding China, private debt is now below pre-pandemic levels, it said.
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