Connect with us

Business

World debt soars to $235tn, as US, China contribute 50%

Published

on

The world’s collective debt has skyrocketed to $235 trillion, with the United States and China contributing a substantial 50% portion at $117.5 trillion cumulative.

This data is sourced from the International Monetary Fund’s (IMF) global debt update, aptly titled “Global Debt Is Returning to its Rising Trend,” published on Wednesday.

According to the report in one year, from 2021 to 2022, the global debt load escalated by $200 billion, pushing it to a mind-boggling 238% of the world’s Gross Domestic Product (GDP).

This figure stands nine percentage points higher than the level recorded in 2019, signifying an alarming and concerning trend.

However, the IMF’s critical gaze falls on developed nations as the primary contributors to the ballooning global debt.

Singling out the economic behemoths China and the United States, who account for $47.5 trillion and $70 trillion, respectively with a total of $117.5 trillion.

The IMF draws attention to China’s status as the world’s largest contributor to non-financial corporate debt, with a substantial 28% share globally.

The IMF’s report also highlights the disconcerting surge in debt levels in low-income developing countries over the past two decades.

The post-global financial crisis era witnessed a rapid acceleration in debt accumulation, giving rise to various challenges and vulnerabilities across these economies, it explained.

Presenting the global debt update were three distinguished officials from the IMF: Vitor Gaspar, the Director of the Fiscal Affairs Department; Marcos Poplawski-Ribeiro, Deputy Director; and Jiae Yoo, an economist.

Their report carries a solemn warning for policymakers worldwide, urging them to remain steadfast and unwavering in their commitment to preserving debt sustainability.

In light of the mounting debt challenges, the IMF offers guidance to governments worldwide, urging them to take immediate and decisive measures to mitigate debt vulnerabilities and reverse the ominous long-term debt trajectory.

When it comes to managing private sector debt, the IMF recommends vigilant monitoring of household and non-financial corporate debt burdens, along with closely monitoring related financial stability risks.

Trending