The IMF just published a report where it shows that global public debt levels will surpass $100Tn this year. And it’s projected to continue growing in absolute terms and relative to global GDP. The biggest economies in the world are becoming heavily indebted, with ratios over GDP surpassing 120%, and as a consequence, growth rates are starting to decline, as you can see in the table below. In the U.S., for every dollar of debt we get less than 50 cents of growth, and the ratio will deteriorate further as debt levels continue to grow. China is now expected to inject money into its economy, to revamp growth, but they’re hesitant to provide details because of the massive size it needs to have and the implications for future growth. Emerging economies are now the healthiest in terms of debt, compared to their developed neighbors, and have become more disciplined, not only in the amount but also in the composition: most of it is now denominated in local currency which allows them to manage crisis much better that in the past.
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