The 235% Question: Is Global Debt Finally Leveling Off?
While global debt has retreated from its pandemic-era peak, the "new normal" remains a staggering 235% of world GDP. However, the story isn't about the total amount anymore—it’s about who is holding the bill.
The Great Tug-of-War
We are seeing a historic shift in where the world’s money is owed. While the total ratio has stabilized, the players have swapped roles:
Government Borrowing is Rising: Public debt now sits at 93% of GDP, fueled by persistent deficits and the rising cost of servicing old loans.
The Private Sector is Retracting: Household and corporate debt have dropped to 143% of GDP, as high interest rates force families and businesses to tighten their belts.
A World Divided
The "stability" is an illusion of averages. Debt is surging in major economies like China (now at 294% total debt-to-GDP) and the United States, while many emerging markets are struggling under a "refinancing wall" as trillions in debt come due at higher rates.
The world has stopped adding to the pile at a record pace, but the cost of carrying that pile has never been more expensive. As interest rates remain "higher for longer," the pressure on government budgets is only just beginning.
