In a blog posted on his Global Debt Monitorthe IMF said that total public and private debt decreased by 10 percentage points, to 247% of global Gross Domestic Product (GDP) in 2021 from its peak of 257% in 2020. This compares with 195% of GDP in 2007, before the global financial crisis.
In dollar terms, global debt continued to rise, albeit at a much slower pace, reaching a record $235 trillion last year.
The global lender noted that private debt, which includes liabilities of non-financial corporations and households, drove the overall reduction, declining by 6 percentage points to 153% of GDP, citing data from 190 countries. The 4 percentage point decline in public debt, to 96% of GDP, was the largest in decades.
The unusually large swings in debt ratios – or “global debt roller coaster” – were due to the economic rebound following the COVID-19 crisis and rapidly rising inflation, according to the IMF.
Debt dynamics varied widely across groups of countries. Advanced economies posted the largest decline, with public and private debt falling to 5% of GDP last year, followed by similar results in emerging markets excluding China.
However, low-income countries saw their total debt ratios continue to rise in 2021, driven by higher private debt, with total debt reaching 88% of GDP.
There is growing concern about the ability of low- and middle-income countries to service their debts, with an estimated 25% of emerging market countries and more than 60% of low-income countries in debt distress or close to them.