Global debt in 2020 reached a record $ 226 trillion, experiencing the largest increase in a year since World War II. This was stated by the International Monetary Fund underlining that global debt has grown by 28 percentage points to 256% of GDP.
“The large increase in debt was justified” by the need to fight the pandemic but the leap “amplifies the weaknesses,” says the IMF. In advanced economies, public debt went from 70% of GDP in 2007 to 124% last year, while private debt went from 164% to 178% of GDP. «A crucial challenge is to hit the right mix of fiscal and monetary policies in a context of high debt and rising inflation. Monetary policy is shifting attention to the increase in inflation and inflation expectations “, highlights the Fund, specifying that with” the increase in interest rates, budgetary policy “must be revisited especially in countries with weaknesses related to high debt.
For the Fund, however, “if governments had not acted, the social and economic consequences would have been devastating”.
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