The Institute of International Finance released a report estimating that the global debt-to-GDP is 356 percent.

The value of 356 percent is 35 percent greater than the value in 2019, showing the effect of the COVID-19 pandemic and all of the stimulus measures from around the globe. In addition to the monumental debt countries issued to stay intact, most economies shrunk in 2020. Nonfinancial private sector debt comprises 165 percent of the ratio.

The debt-to-GDP ratio is used to evaluate when debt levels become extreme compared to output, an issue many economists have called governments to address. "The upswing was well beyond the rise seen during the 2008 global financial crisis," IFF economists said in the report. "Back in 2008 and 2009, the increase in global debt ratio was limited to 10 percentage points and 15 percentage points, respectively."

Here are the numbers:

  • Global debt increased to $281 trillion last year
  • Private and public sector debt rose by $24 trillion
  • Debt has increased by $88 trillion in the past decade, with 25 percent of that in the past year
  • Government debt comprises 105 percent of the ratio

High levels of debt are concerning for several reasons. Inflation, increased interest rates, slowed growth, and diminishing returns are several of the concerns that have been noted in recent economic evaluations.

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Economics, Finance and Investing