Image Source: Pixabay

The IMF has updated its Global Debt Database, and Vitor Gaspar, Carlos Eduardo Goncalves, and Marcos Poplawski-Ribeiro point out a few of big-picture changes in a short article “Global Debt Remains Above 235% of World GDP” (IMF Blog, September 17, 2025).

Here’s an overall view of global debt since 1950, measured as a share of global GDP:
 

The big-picture patterns here are intriguing. From 1950 up to about 1980, global debt remains at roughly 100% of global GDP. However, during this time the share of public debt (yellow bars) is falling, while the share of private debt (blue bars) is rising. in 1950, public debt is substantially larger than private debt; by 1980, private debt is substantially larger than public debt–and has remained larger ever since.

But in the 1980s, global debt as a share of GDP starts rising. Comparing the early 1990s to the present, corporate debt as a share of global GDP hasn’t risen much, household debt has risen moderately, and government debt has risen by a lot–although it has dropped a bit in the last few years as pandemic-related spending has diminished.

In one way, rising debt is not a surprise. Countries as a low level of economic development often have little debt, because their banking and financial sector is also underdeveloped. Such economies lack a well-developed channel through which savings by households and firms can become loanable funds for others in the economy.

But at some point, for any organization or household, rising levels of debt become a worry. It’s thought-provoking to me that the corporate sector, where outside investors in corporate stocks and bonds are monitoring company financial records, hasn’t seen much of a rise in debt. Instead, the rising debt levels are traceable to households and government.

Here’s another figure from the IMF authors, focused on changes in 2024 for the US, China, and for advanced and other economies around the world. In the US, public debt rose in 2024, but private debt dropped–in part because many US corporations have high profits and thus can reduce their borrowing, and perhaps also in part because rising public debt is leading to higher interest rates in a way that leads to “crowding out” of private borrowers
 

But when it comes to higher debt levels in 2024, the obvious “winner” is China, with dramatic rises in both public and private debt. Indeed, given that the banking and financial system in China is heavily controlled and backstopped by its government, even the private debt listed here is in some sense “public.” Many of the causes behind China’s economic growth involve real changes, like a better-skilled workforce, improved infrastructure, capital investment, and better technology. But at least one of the causes has also involved turning the debt spigots wide open, especially through local government lending to companies. Debt can be a facilitator of growth, but excessive debt can also cripple growth. China seemed to be attempting to address its pre-existing debt problem with additional debt–a policy approach that rarely ends well.

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