ECONOMIC PULSE
Can the World Reverse Decades of Financial Overload?
Although the global debt has receded in 2023 from record levels reached post-pandemic, the world is still grappling with debt addiction
While debt can stimulate growth and bridge gaps during economic downturns, it becomes problematic when mismanaged or overleveraged. Maintaining a balance between borrowing and repayment capacity is critical to ensuring long-term stability and prosperity, whether for nations or individuals. The picture is not very rosy when we analyze the current global debt data. It has been steadily climbing for decades, reaching unprecedented levels during the COVID-19 pandemic.
However, the latest data from the International Monetary Fund (IMF) indicates a slight decline in global debt levels in 2023, marking a critical juncture in the world’s financial landscape. During the pandemic in 2020, the debt-to-GDP ratio peaked at 258%, driven by the combined forces of public and private debt. In 2023, global debt stood at 237% of GDP, comprising 94% of public debt and 143% of private debt (including household and non-financial corporate debt).
This reduction from pandemic-era levels indicates some progress but remains alarmingly high compared to the…
