Global government debt totaled about $111 trillion last year, equivalent to nearly 95% of global output, according to International Monetary Fund data. IMF Managing Director Kristalina Georgieva warned this week that debt could exceed 100% of global gross domestic product by 2029, two years earlier than previously forecast.
Interest-rate and inflation pressures
Speaking at the Qatar Economic Forum in New York, Georgieva said governments around the world had not taken sufficient steps to rein in budget deficits as debt headed towards record levels, driven particularly by faster borrowing in the United States and China.
Economies are facing mounting pressure from disruptions to energy and transport, slowing growth and persistently high inflation. Georgieva warned that these disruptions could inflict greater damage on commodity-producing countries, potentially pushing their economies into sharp contractions.
She added that persistent inflation could prompt central banks to raise interest rates again, increasing borrowing costs, making debt servicing more difficult for governments facing growing fiscal burdens and narrowing the room for maneuver in economic policy.
United States, China and Japan lead
The United States tops the list of countries by public debt, at more than $40 trillion, equivalent to about 126% of its gross domestic product, despite benefiting from the dollar's international standing as a leading reserve currency.
China ranks second, with debt exceeding $16 trillion, as borrowing accelerates to finance infrastructure projects and state-owned companies. Public debt is equivalent to about 80% of the size of the Chinese economy.
Japan ranks third, with debt of nearly $10 trillion, but has the highest debt-to-GDP ratio among the three countries, with its debt equivalent to about 230% of the total size of its economy.
A temporary decline followed by a fresh rise
Global debt stood at about 80% of total global output in 2018, before the outbreak of the coronavirus pandemic, in an environment of extremely low interest rates. The following year, the ratio rose to 84%, and debt exceeded $70 trillion for the first time as government borrowing increased.
The ratio surged to about 100% of global output during the coronavirus pandemic, as governments financed emergency healthcare packages and provided cash assistance to prevent markets from collapsing during lockdowns.
As economies reopened, the debt-to-global-output ratio fell to 96%, then continued to decline in 2022 to about 92%, before rising again amid persistent inflation and slowing global economic growth.
In 2024, the debt-to-global-output ratio remained relatively stable, but total debt exceeded $100 trillion for the first time before continuing to rise to about $111 trillion last year. This trajectory is increasing pressure on governments to bring their public finances under control, at a time when monetary tightening could raise debt-servicing costs and slow growth.
