Decline in private lending offsets increase in public borrowing; notable differences persist across countries and income groups.
- Global debt stabilized at just above 235% of GDP, though it remains elevated (IMF Global Debt Database).
- Private debt fell to below 143% of GDP (lowest since 2015), mainly due to reduced household liabilities and stable corporate debt.
- Public debt rose to nearly 93% of GDP, reflecting higher government borrowing.
Total debt slightly increased to $251T:
- Public debt: $99.2T
- Private debt: $151.8T
Global Debt nearly stabilized in 2024
Sources: IMF 2025 Global debt database
Diverging trend across income groups
- Global variations: Debt dynamics differ significantly across countries and income groups. The US and China remain central in shaping global debt patterns, while many advanced and emerging economies continue to face historically high debt and deficit levels.
- United States: Public (general government) debt increased to 121% of GDP (from 119%).
Private debt fell sharply by 4.5 percentage points to 143% of GDP, reflecting deleveraging.
- China: Public debt rose to 88% of GDP (from 82%).
Private debt surged by 6 points, reaching 206% of GDP, highlighting strong corporate and household borrowing.
- Advanced economies (excluding US):
Public debt declined by more than 2.5 percentage points, averaging 110% of GDP.
Debt decreases in Japan, Greece, and Portugal offset increases in France and the UK.
- Emerging markets & developing economies (excluding China):
Public debt edged down to just under 56% of GDP, suggesting modest fiscal consolidation.
Private debt trends were mixed: Increases in large economies such as Brazil, India, and Mexico and Declines in countries like Chile, Colombia, and Thailand.
Public and private debt -to-GDP changes varied markedly across Advanced Economies and Emerging & Development Economies in 2024.
What drives Public and Private Debt Patterns?
- Public debt driver – Persistently high global fiscal deficit (~5% of GDP) remains the primary cause of rising public debt. This deficit still reflects legacy costs from the Covid-19—such as subsidies and social benefits―combined with rising net interest costs.
- Private debt decline – Advanced economies
Companies borrowing less due to subdued growth prospects, continuing a trend since 2023.
US corporates: Strong balance sheets and high cash reserves reduced need for new borrowing.
In some cases, Crowding-out effect observed: rising public borrowing limits private credit availability or raises borrowing costs.
- Private debt increase – China
Growth mainly in non-financial corporate debt, supported by ample credit supply targeting strategic sectors.
Household debt declined due to weak mortgage demand, job market concerns, and slower wage growth.
- Private debt in Emerging markets
Increase, driven by:
High interest rates impacting non-performing loans (Brazil).
Improved growth prospects (India).
Corporate mergers & acquisitions (Mexico and others).
Declines in countries with weaker growth prospects (Colombia, Thailand).
- Low Income countries
Debt dynamics shaped by: Limited financial development, Tight liquidity conditions, Sovereign debt crowding-out private borrowing (debt nexus).
- Policy recommendation
Governments should: Implement gradual fiscal adjustments within credible medium-term plans.
Reduce public debt while avoiding crowding-out of private borrowing and investment.
Foster an environment that supports growth and reduces uncertainty, encouraging private sector investment.
China’s Debt Overview
- China’s total debt (public + private) has reached ~294 – 300% of GDP (2025 est.), one of the highest among major economies.
Public (government) debt: ~88% of GDP (2024), up from 82% in 2023.
Private debt: ~206% of GDP, dominated by corporate borrowing.
Sources: IMF 2025 Global debt database
Sources: IMF 2025 Global debt database
Sectoral Breakdown
- Non – Financial Corporate Debt (~160% of GDP)
It’s the largest component of China’s debt and driven by state-owned enterprises (SOEs), infrastructure projects, and manufacturing.
Many firms borrow heavily through shadow banking and local government financing vehicles (LGFVs).
- Government Debt (~88% of GDP)
Rising due to fiscal stimulus, and bailouts of distressed local governments/property developers after Covid era.
- 3. Household debt (~62- 65% of GDP)
Slowed recently due to weak property sector, low mortgage demand, and subdued consumer confidence.
- 4. Financial Sector debt
Also rising, due to bank lending expansion to support SOEs and property stabilization efforts.
Risks to watch
- Hidden Debt – Unreported local government liabilities could push actual debt far above official estimates.
- Shadow banking exposure – Nonbank lenders still play a big role in corporate financing, raising transparency concerns.
- Policy Missteps – Over-reliance on credit-driven stimulus may worsen long-term vulnerabilities.
Global Implications of China’s rising debt
Slower growth transmission: High debt means more resources go to servicing debt instead of consumption or productive investment. This slows China’s GDP growth, directly impacting global demand for commodities, exports, and capital goods.
- High debt pressures China’s yuan stability: if deleveraging intensifies, capital flight risk rises → potential global financial market volatility.
- If defaults spike in China, global investors holding Chinese bonds/equities may reprice risk across emerging markets.
- Commodity Exporter – Australia (iron ore, coal), Brazil (soy, iron ore), Chile & Peru (copper), Indonesia (coal, palm oil) → China is their largest buyer. Slower Chinese demand is equal to weaker export revenues.
- South Korea, Taiwan, Japan: Heavy dependence on Chinese manufacturing demand (electronics, machinery). ASEAN nations: Vietnam, Malaysia, Thailand tied via supply chains.
Business sectors Impacted globally
- Metals & Mining – Iron ore, copper, steel demand is China-driven (~50%+ of global consumption).
- Energy – Oil & LNG (China is 2nd largest importer). Any slowdown reduces global prices.
- Real Estate & Construction materials – Cement, glass, heavy equipment — global suppliers feel pain if China’s property sector stays deleveraging.
- High end manufacturing – German machinery, Japanese robotics, Korean semiconductors — demand weakens if Chinese corporates cut CAPEX.
- Luxury & Consumer goods – Slower Chinese household credit growth is equal to weaker demand for luxury goods (LVMH, Richemont, autos like BMW).
- Global Banking & Finance – Foreign banks with China exposure (HSBC, Standard Chartered, some Japanese megabanks) may face higher NPLs / repricing risk.