The International Monetary Fund has warned of a widening global debt bubble over the past decade, despite the decline in total debt as a percentage of GDP after the Corona pandemic.
The fund said in a statement, on Tuesday, that the weak economic growth expectations in the world, and the more stringent monetary policy, call for caution in managing global debt.
Global debt remained above pre-pandemic levels in 2021, even after recording the largest decline in 70 years, highlighting the challenges facing policymakers.
Total public and private debt decreased in 2021 to the equivalent of 247 percent of global GDP, and decreased by 10 percentage points from its peak level in 2020.
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According to the latest update of the International Monetary Fund’s global debt database, global debt continued to rise in dollar terms, albeit at a slower pace, reaching a record level of $235 trillion in 2021.
Private debt, which includes the obligations of businesses and households, led the overall decline, falling by 6 percentage points to 153 percent of GDP.
Unusually large swings in debt ratios are due to the economic recovery after the Corona pandemic, and the rapid rise in inflation that followed, according to the International Monetary Fund.
And he added, “The decline in debt was the largest in advanced economies, as private and public debt fell by 5 percent of GDP in 2021.”
While in low-income developing countries, overall debt ratios continued to rise in 2021, driven by rising private debt.
