The International Monetary Fund (IMF) reported on Wednesday that global debt grew to $226 trillion in 2020, the highest level since World War II, with richer countries doing the most of the borrowing.
Global debt has risen to 256 percent of GDP. Also, a significant level that countries around the world will have to consider as they try to recover from the COVID-19 downturn and deal with new versions like Omicron.
“The large increase in debt was justified by the need to protect people’s lives, preserve jobs and avoid a wave of bankruptcies. If governments had not taken action, the social and economic consequences would have been devastating”. IMF officials wrote in a blog outlining the latest update to the Washington-based crisis lender’s Global Debt Database.
“But the debt surge amplifies vulnerabilities, especially as financing conditions tighten. High debt levels constrain, in most cases, the ability of governments to support the recovery and the capacity of the private sector to invest in the medium term.”
The global public debt ratio reached a new high of 99 percent of GDP last year. Government borrowing accounts for more than half of the overall rise. Private debt also set a new high, according to the IMF.
Since the mid-1960s, public debt has accounted for the biggest percentage of overall world debt. The IMF blamed the policy responses against both the COVID-19 pandemic in 2020 and the 2008 global financial crisis.
According to the data, wealthier countries accounted for 90% of the debt growth last year. Both governmental and private debt likewise increasing in those countries.
Emerging markets and low-income developing countries, for example, took on significantly smaller debt burdens of around $1 trillion each.