Global Debt-to-GDP Ratios Rebound to Pre-Pandemic Levels at 333%

The global government debt-to-gross domestic product ratio rose in Q1 after consistent dips in 2023. According to Stocklytics.com, the debt-to-GDP ratio is 333%, with advanced markets, the U.S., and Japan being the most significant contributors. 

The site’s financial analyst, Edith Reads, comments:

The spike in interest rates has made it even more challenging for governments to pay off existing debts. Cascading crises like political invasions and climate change have forced countries to borrow even more capital to cover their spending.

Stocklytics financial analyst, Edith Reads

Debt To GDP Ratios

At the start of 2023, governments owed roughly $304 trillion. In Q2, the debt gap was reduced to $306 trillion and to a further $305 trillion in Q3, seeing how inflation was on a downturn.

In Q4 ’23, global government debt was at $313.8 trillion, with a debt-to-GDP ratio of 331.6%. However, in Q1, public debt quickly escalated to over $315 trillion, representing a 332.7% debt-to-GDP ratio.

Developed economies contributed over two-thirds of the existing debt, driving the same narrative as in 2023 when they accounted for over $68 trillion, or 111% of GDP. 

Why is Government Debt Rising? 

With rising interest rates across all global central banks, governments are grappling with huge debts, seeing that paying off the existing debt costs more. Developing regions are particularly affected by high borrowing and repayment costs; left with the choice between servicing debt or serving their people. 

These governments must increase the resources necessary to pay creditors to pay off their debts fully. However, many have focused more on revitalising their economies and responding to rising food and energy prices as they phase out pandemic-related financial support. Developed countries are also dealing with more existential crises like climate change and the high cost of living in their countries, fueling high debt ratios.

Will Debt Continue to Rise?

Looming concerns over a consistently ageing and dwindling population continue to threaten the economic stability of most developed countries. Governments must borrow capital to finance their budgets without a proper working population.

Moreover, concerns over climate change and geopolitical conflicts are triggering augmented spending, hinting at a snowballed debt crisis in the future. Besides, the International Monetary Fund projected that the average G7 debt ratios will increase in the coming years.