Global Debt as a Share of Economic Output Declined in 2022

September 14, 2023

The International Monetary Fund (IMF) reported that global debt as a share of economic output decreased for the second consecutive year in 2022, but this trend may be ending as the post-COVID growth surge wanes. According to the IMF’s Global Debt Database update, the world’s total debt-to-GDP ratio fell to 238% in 2022, down from 248% in 2021 and 258% in 2020. However, despite the decline over the past two years, global debt remains well above the 2019 level of 238% of GDP.

Key points from the report include:

China has been a major contributor to the increase in global debt in recent years, with its debt burden growing to 272% of GDP in 2022.
The United States also saw a decline in its total debt-to-GDP ratio, from 284% in 2021 to 274% in 2022.
The IMF cautioned that debt is likely to rise again in the medium term and urged governments to adopt strategies to reduce debt vulnerabilities, including public debt, household debt, and non-financial corporate debt.

The IMF noted that the rebound in real GDP growth is fading, and inflation is expected to stabilize at a low level over the medium term. If global debt resumes its upward trend, the IMF warns that the debt reduction observed since the pandemic could be seen as a temporary deviation from its long-term rising trend.

What factors contributed to the decline in global debt over the past two years, and how much of the COVID-induced spike in debt has been recouped?

The decline in global debt over the past two years was driven by strong economic growth and higher-than-expected inflation. However, despite the decline, only about two-thirds of the debt increase that occurred during the COVID-19 pandemic has been recouped.

What concerns and recommendations did the IMF provide in response to the potential rebound in global debt levels?

The IMF expressed concerns about the possibility of a rebound in global debt over the medium term. It urged governments to adopt strategies to reduce debt vulnerabilities, including addressing public debt, household debt, and non-financial corporate debt. The IMF emphasized the need for such measures given the fading rebound in real GDP growth and the expectation of low inflation over the medium term.

« Previous Post Next Post »