Global Public Debt to Be Over $100 Trn in 2024, 100 PC of GDP in 2030

Chennai: Global public debt is expected to exceed $100 trillion or 93 per cent of global GDP in 2024 and to keep rising through the end of the decade to 100 per cent of GDP by 2030.

After a decline in 2021−22, global public debt edged up again in 2023 and is projected to touch 100 per cent of GDP by 2030, with the world’s two largest economies, China and the United States, largely driving the increase.

Although debt is projected to stabilize or decline in about two-thirds of countries, it will remain well above levels foreseen before the pandemic. For advanced economies as a group, three-year-ahead debt-at-risk has declined somewhat from pandemic peaks and is estimated at 134 per cent of GDP, whereas debt-at-risk has increased to 88 per cent of GDP for emerging market and developing economies. India’s public debt currently stands at 81.59 per cent of the GDP and it is 69.4 per cent for emerging markets and developing economies.

Spending pressures to address green transitions, population aging, security concerns, and long-standing development challenges are mounting on the governments.

Fiscal adjustment plays a crucial role in containing debt risks. With inflation moderating and central banks lowering policy rates, economies are better positioned now to absorb the economic effects of fiscal tightening. A cumulative tightening of about 3.8 per cent of GDP over the same period would be needed for an average economy to ensure a high likelihood of debt stabilization.

As per IMF, emerging markets and developing economies have greater potential to increase tax revenues by upgrading tax systems, broadening tax bases mostly by reducing informality, and enhancing revenue administration capacity. On the expenditure side, efforts to rationalize large government wage bills, strengthen social safety nets, and safeguard public investment are key to limiting the negative impact on output, protecting vulnerable households, and supporting debt reduction.

IMF’s report on the impact on Artificial Intelligence on Capital Markets, finds that adoption of AI may contribute positively to financial stability, and can provide clear benefits to financial institutions, such as efficiency improvements and higher productivity, refined portfolio investing frameworks, improved return forecasting, and quantification of crash risk.

However, AI could also introduce new forms of financial stability risks and accelerate well-established financial stability concerns such as leverage, liquidity strains, and interconnectedness.