Global debt as a share of GDP fell in 2022, but may rise again
The International Monetary Fund (IMF) said that the global debt as a share of economic output fell significantly in 2022 for the second year in a row, but the decline may be ending as a post-COVID growth surge 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.
However, the decline for the past two years, driven by strong growth and stronger-than-expected inflation, has recouped only about two thirds of the COVID-induced spike in global debt. The ratio remains well above the 2019 level of 238% of GDP.
China has played a central role in increasing 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.
Those levels are similar to the United States, which saw its total debt-to-GDP ratio fall to 274% in 2022 from 284% in 2021, according to the IMF report.
The IMF warned that the world has been on a debt “rollercoaster” for three years, but debt is likely to rise again over the medium-term. The IMF urged governments to adopt strategies to help reduce debt vulnerabilities — both in public debt, household debt and non-financial corporate debt.
“The rebound of real GDP growth is fading. Inflation is projected to stabilize at a low level over the medium term,” the IMF said. “If global debt resumes its rising rend going forward, the debt rollercoaster since the pandemic will look nothing more than a temporary deviation around its long-term rising trend.”
Here are some key takeaways from the article:
- Global debt as a share of GDP fell in 2022 for the second year in a row, but the decline may be ending.
- The decline is due to strong growth and stronger-than-expected inflation.
- However, the decline has only recouped about two thirds of the COVID-induced spike in global debt.
- China’s debt burden has defied the moderating trend and is now similar to the United States.
- The IMF warned that debt is likely to rise again over the medium-term and urged governments to adopt strategies to reduce debt vulnerabilities
Related News
- 21 Sep
Chipmaker Kokusai Electric to list on Tokyo Stock Exchange on Oct. 25
Kokusai Electric, a chipmaking equipment maker, plans to list on the Tokyo Stock Exchange on October 25 in what is expected to be the largest IPO in Japan in five years. The company, which was spun off from Hitachi in 2018 and is now owned by the private equity firm KKR, has set a tentative IPO price of 1,890 yen per share and is expected to raise around 210 billion yen ($1.4 billion) in the IPO. A successful IPO for Kokusai Electric could lead to a wave of new listings in Japan and boost the market's appetite for chipmaking stocks. However, investors should be aware of the risks associated with investing in IPOs.
- 20 Sep
Shell opens world’s largest EV charging station in China
Shell has opened the world's largest EV charging station in Shenzhen, China. The station has 258 charging points and solar panels that can generate 300,000 kilowatt-hours of renewable electricity per year. The station is a joint venture between Shell and Chinese EV giant BYD.
- 18 Sep
Taiwanese Military Detects Record Number of Chinese Warplanes
Taiwan detected a record number of Chinese warplanes around the island in one day, with 40 crossing the median line of the Taiwan Strait. The Taiwanese military condemned China's "continued military harassment" and warned that it could lead to a sharp spike in tension and worsen regional security. The United States has been increasing its military presence in the region in a bid to deter China from taking any aggressive action against Taiwan.
- 18 Sep
Indian-American Presidential Candidate Vivek Ramaswamy Refutes Age Criticism
Vivek Ramaswamy, a 38-year-old Indian-American candidate for President of the United States, has refuted criticism that he is too young for the office. He pointed out that Thomas Jefferson was only 33 years old when he wrote the Declaration of Independence, and argued that the United States needs a leader who is "not afraid to revive the country's founding principles." Ramaswamy is facing an uphill battle in the Republican primary, but he is hoping that his message will resonate with voters.
- 16 Sep
Pakistan: Petrol, HSD Prices Reach Historic Highs
Pakistan's caretaker government has hiked petrol and diesel prices to over Rs 330 per litre, the highest ever in the country's history. The move comes as the country struggles with double-digit inflation and is under pressure from the IMF to raise taxes and reduce subsidies. The hike will put an unbearable burden on the masses and make it difficult for many people to make ends meet.
Leave a Reply