China is pushing worldwide debt towards potentially unmanageable levels due to extensive borrowing by its property developers and local authorities, as per the International Monetary Fund (IMF).
The IMF pointed out that the debt in the globe’s second-biggest economy escalated by 7.3 percentage points, reaching 272% of its GDP in 2022.
This surge includes considerable growth in both public and private sectors. It is in stark contrast to a decrease of 10 percentage points in the global debt, which stood at 238% of the global GDP. This decrease came as economies began to bounce back from the pandemic and there was reduced government expenditure on wage support.
Yet, the IMF cautioned that the drop in global debt in 2022 might be a temporary effect of the pandemic. They expressed concerns that the trajectory of long-term debt indicates a pressing requirement for fiscal stabilization.
In its recent global debt overview, the IMF commented, “Even though the global debt was substantially higher than before the pandemic, it might go back to its long-standing upward curve.”
The institution emphasized the necessity for governments to act promptly to diminish debt-related risks and counteract this pattern.
Furthermore, the IMF identified China as a major player influencing global debt over the past several years.
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