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Live News Update: Global Debt Burden Falls as Inflation Rises

Vítor Gaspar, director of the IMF’s Fiscal Department, described 2021 as a ‘very extraordinary year’ © James Lawler Duggan/Reuters

Global debt as a share of output fell last year to its lowest level in at least 70 years as the economy recovered from a sudden slowdown in 2020 and inflation surged, according to IMF data released on Monday.

The ratio of global public and private debt to gross domestic product fell by 10 percentage points in 2021 after rising 29 percentage points the year before, according to data from the IMF’s Global Debt Database released on Monday.

The figures highlight that the government’s massive bailout of the pandemic-hit economy has not only triggered increased growth but also global inflation on a scale not seen in decades. increase.

Last year’s decline was the largest since the IMF’s data series began in 1950 and followed the previous year’s record rise. According to the IMF, global debt will reach 247% of global GDP in 2021, compared to 228% of GDP in 2019.

The decline was almost entirely driven by rebounding growth and rising prices. These two factors have combined to reduce the debt-to-GDP ratio of her G20 group of the world’s largest economies by 9.5 percentage points.

In dollar terms, total global public and private debt increased slightly, reaching a record $235 trillion last year, the fund added. As for GDP, after a slight further decline this year, debt levels are likely to stabilize in 2023 as the global economy slows, the fund said.

IMF Fiscal Affairs Director Vitor Gaspard described 2021 as a “very unusual year,” adding: Risk tolerance declines, especially in countries with perceived weak fundamentals. “

https://www.ft.com/content/7358e328-d912-4cc6-9fd2-ffc4cb83c65b Live News Update: Global Debt Burden Falls as Inflation Rises

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