World’s macroeconomic observer – the International Monetary Fund cautioned that international debt has scaled up to a historical high level. Debt of the global economy has reached $152 trillion which is nearly two times the GDP of the world economy.
The debt report was published under the IMF’s October 2016 edition of the ‘Fiscal Monitor’ that evaluates government finances and expenditure.
IMF has a strong research division that makes extensive study about individual economies and the world economy as a whole. The Fund’s surveillance function is one of the most sophisticated activity by the seventy-year-old entity.
Nearly two third of the debt is held by the private sector. Bulk of the debt is concentrated in the richest economies, though China is increasing its borrowings.
Regarding government debt, the report indicate that India government’s debt will come down significantly whereas that of Chinese government will go up. As per the report, Indian government’s debt is expected to decrease to 59.2 per cent of GDP by 2021 from 74 % in 2008. On the other hand, Chinese government’s debt will increase to 57.2% from 29% during the same period.
For other emerging countries, the debt trend indicates an increasing trend. For EMEs from Europe, Asia and Latin America, government debt will go up by 2021. Brazil’s debt is predicted to soar up to 94% by 2021.
According to the Fund, the debt burden highlights the difficulty of boosting the fragile world economy when borrowing, particularly by corporates, has already reached unprecedented levels.