IMF says global debt well above pre-pandemic levels despite steep 2021 drop By Reuters
Economy 27 minutes ago (Dec 12, 2022 15:05)
© Reuters. FILE PHOTO: IMF Director of Fiscal Affairs Vitor Gaspar speaks to reporters at the headquarters of the International Monetary Fund in Washington, U.S., October 12, 2022. REUTERS/James Lawler Duggan/File Photo
By Andrea Shalal
WASHINGTON (Reuters) – Global public and private debt saw its biggest drop in 70 years in 2021 after reaching record highs because of the impacts of COVID-19, but overall remained well above pre-pandemic levels, the International Monetary Fund said on Monday.
In a blog released with its inaugural Global Debt Monitor, the IMF said total public and private debt decreased by 10 percentage points to 247% of global gross domestic product in 2021 from its peak of 257% in 2020. That compares to around 195% of GDP in 2007, before the global financial crisis.
In dollar terms, global debt continued to rise, although at a much slower rate, reaching a record $235 trillion last year.
The global lender said private debt, which includes non-financial corporate and household obligations, drove the overall reduction, decreasing by 6 percentage points to 153% of GDP, citing data for 190 countries.
The drop of 4 percentage points for public debt, to 96 percent of GDP, was the largest such drop in decades, it said.
The unusually large swings in debt ratios – or “global debt rollercoaster” – were caused by the economic rebound from COVID-19 and the ensuring swift rise in inflation, the IMF said.
Debt dynamics varied widely across country groups. Advanced economies saw the biggest drop in debt, with both public and private debt dropping 5% of GDP last year, followed by similar results in emerging markets, excluding China.
But low-income countries saw their total debt ratios continue to increase in 2021, driven by higher private debt, with total debt reaching 88% of GDP.
There are growing concerns about the ability of low- and middle-income countries to repay their debts, with an estimated 25% of emerging market countries and over 60% of low-income countries either in or near debt distress.
IMF fiscal affairs chief Vitor Gaspar and two other senior IMF economists said in a blog also released on Monday that it would become increasingly difficult to manage the high levels of debt if the economic outlook continued to deteriorate and borrowing costs rose further.
High inflation levels continued to help reduce debt ratios in 2022, but spending will increase if inflation becomes persistent, which could lead to higher premiums.
They said governments should pursue fiscal policies that help reduced inflationary pressures now and debt vulnerabilities over the long term, while continuing to support the most vulnerable.
“In times of turbulence and turmoil, confidence in long-run stability is a precious asset,” they said.
IMF says global debt well above pre-pandemic levels despite steep 2021 drop
Terms And Conditions
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.