• Login
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
  • Home
  • News
    • General
    • Political
  • Economy
  • Business
    • Agribusiness
    • Aviation
    • Banking & Finance
    • Energy
    • Insurance
    • Manufacturing
    • Markets
    • Maritime
    • Real Estate
    • Tourism
    • Transport
  • Technology
    • Telecom
    • Cyber-security
    • Cryptocurrency
    • Tech-guide
    • Social Media
  • Features
    • Interviews
    • Opinions
  • Reports
    • Banking/Finance
    • Insurance
    • Budgets
    • GDP
    • Inflation
    • Central Bank
    • Sec/Gse
  • Lifestyle
    • Sports
    • Entertainment
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video
No Result
View All Result
No Result
View All Result
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
No Result
View All Result
Home Economy

The pre-pandemic debt landscape and why it matters

5 years ago
in Economy, Features, highlights, Home, home-news, latest News, Opinions
2 min read
0 0
0
49
VIEWS
Share on FacebookShare on TwitterShare on Linkedin

Many countries entered the pandemic with elevated debt levels. Our new update of the IMF’s Global Debt Database shows that global debt—public plus private—reached $197 trillion in 2019, up by $9 trillion from the previous year. This substantial debt created challenges for countries that faced a debt surge in 2020, as economic activity collapsed and governments acted swiftly to provide support during the pandemic.

Our data show that the global average debt-to-GDP ratio (weighted by each country’s GDP in US dollars) rose to 226 percent in 2019, 1.5 percentage points higher than in 2018. Most of the increase came from higher public debt in emerging market economies and advanced economies outside of Europe. In low-income countries, total debt rose by 1.3 percentage points of GDP in 2019—mostly driven, in contrast, by higher private debt.

chart

As shown in our chart of the week, a dive into the numbers reveals that the 2019 global public debt surpassed its 2007 level by 23 percentage points of GDP. This is primarily driven by the higher levels among advanced economies, where public debt rose from 72 to 105 percent of GDP, and to a lesser degree by emerging market economies (from 35 to 54 percent of GDP) and low-income countries (an increase of 14 percentage points to 44 percent of GDP).

Higher debt can potentially reduce the ability of governments to react to the COVID-19 crisis as forcefully as they were able to respond to the global financial crisis (see the January 2021 Global Financial Stability Update). However, many countries benefited from much lower borrowing costs in recent months, partially because very low inflation rates have allowed central banks to keep interest rates at record low levels. Compared to 2007, the average interest bill as a share of revenues was 0.3 percentage points lower in 2019.

Indeed, the high public debt did not immediately restrict the ability of many countries—especially the advanced economies—to borrow to address the crisis. But some highly indebted emerging market and developing economies are starting to find it more difficult to borrow to support the response to the pandemic.

High and rising private debt may also be cause for concern as countries try to transition to a solid recovery.

In the leadup to some past financial crises, we have seen private debt accumulate at a rate far exceeding GDP growth, so this phenomenon can be a warning sign of rising vulnerability. Past experience shows that following credit booms, economic activity tends to suffer.

RelatedPosts

The Global Push for a Just Transition in Energy Jobs

Why the IEA Reinstated Its “Business as Usual” Scenario

GRA Targets Offshore Income in Expanded Tax Compliance Drive

If private debt of households, firms, or both proves unsustainable, it can result in large-scale bankruptcies, which might require government intervention in the form of bailouts of critical sectors or government guarantees on private loans. Private sector debt can therefore pose an additional risk to governments that are already highly indebted. Moreover, as public finances are further stretched during the pandemic, elevated private debt levels before the pandemic can leave governments with less room to maneuver in promoting a healthy and robust recovery.

Source: IMF
Via: norvanreports
Tags: COVID-19 crisiselevated debt levelsGDP growthglobal average debt-to-GDP ratioPrivate sector debt
No Result
View All Result

Highlights

Gold Boom Drives Rising Costs for Australian Producers

La Liga: Barcelona Stages Late Comeback Against Levante as Atletico Madrid Drops Points Again

Premier League: Spurs Stun Man City at Etihad; Arsenal Dominates Leeds to go Top

CHAN 2024: Senegal, Sudan Complete Semifinal Lineup

From Promise to Peril: How Exam Fraud is Eroding Ghana’s Educational Soul

The 10 Fastest-Growing Trading Nations in Africa

Trending

Features

The Global Push for a Just Transition in Energy Jobs

August 24, 2025

The Global Push for a Just Transition in Energy Jobs For years, energy workers from the fossil...

Why the IEA Reinstated Its “Business as Usual” Scenario

August 24, 2025

GRA Targets Offshore Income in Expanded Tax Compliance Drive

August 24, 2025

Gold Boom Drives Rising Costs for Australian Producers

August 24, 2025

La Liga: Barcelona Stages Late Comeback Against Levante as Atletico Madrid Drops Points Again

August 24, 2025

Who we are?

NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World

NorvanReports is a unique data, business, and financial portal aimed at providing accurate, impartial reporting of business news on Ghana, Africa, and around the world from a truly independent reporting and analysis point of view.

© 2020 Norvanreports – credible news platform.
L: Hse #4 3rd Okle Link, Baatsonaa – Accra-Ghana T:+233-(0)26 451 1013 E: news@norvanreports.com info@norvanreports.com
All rights reserved we display professionalism at all stages of publications

No Result
View All Result
  • Home
  • Business
    • Agribusiness
    • Aviation
    • Energy
    • Insurance
    • Manufacturing
    • Real Estate
    • Maritime
    • Tourism
    • Transport
    • Banking & Finance
    • Trade
    • Markets
  • Economy
  • Reports
  • Technology
    • Cryptocurrency
    • Cyber-security
    • Social Media
    • Tech-guide
    • Telecom
  • Features
    • Interviews
    • Opinions
  • Lifestyle
    • Entertainment
    • Sports
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video

Welcome Back!

Login to your account below

Forgotten Password?

Create New Account!

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
NORVANREPORTS.COM | Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.