Global Public Debt Reaches $100,000 Billion, Almost 100% of Global GDP
The global public debt today exceeds $100,000 billion, or nearly 100% of global GDP. But beyond its magnitude, it is its distribution that stands out. Global debt is heavily concentrated among major advanced economies. The United States dominates with over $38,000 billion in debt, followed by China (around $19,000 billion) and Japan (almost $10,000 billion). Together, these countries account for nearly 60% of global public debt. Major European economies, like France, Italy, or Germany, also contribute significantly to this global total. This observation highlights a fundamental paradox: global debt is primarily a debt of economic powers, those with financial credibility and deep enough markets to attract global savings.
A Debt That Has Become a Global Financial Asset
Aside from its distribution, public debt has transformed in nature. It is mostly issued in the form of sovereign bonds, traded on markets and held by a wide range of actors: institutional investors, banks, international funds, and central banks. Since the 2008 crisis, these entities have played a crucial role in absorbing a significant portion of sovereign issuances. Institutions like the US Federal Reserve, the European Central Bank, and the Bank of Japan have helped maintain exceptionally favorable financing conditions for over a decade. This evolution has led to a profound shift: public debt is no longer just an instrument of fiscal policy but has become a central financial asset, integrated into global portfolios and essential to market functioning.
High Debt Levels Yesterday and Today, But Opposite Trajectories
Economic history provides an enlightening comparison. At the end of World War II, public debt levels in major economies had already reached or surpassed 100% of GDP. However, this situation did not lead to long-term economic fragility.
On the contrary, the decades that followed saw an exceptional phase of prosperity. In the United States, average annual growth was around 3.5% to 4% from the late 1940s to the 1970s, with unemployment rates close to 4% to 5%. The UK, despite a debt exceeding 200% of GDP, maintained unemployment often below 3% in the 1950s-1960s, with solid growth. In continental Europe, France and Germany achieved even more remarkable performances, with growth rates around 5% to 6% and near full employment. In other words, yesterday’s debt was an investment debt, directed towards production, urbanization, and structural transformation of economies.
Today: Similar Debt Levels, but Deteriorated Indicators
Unlike the post-war period, the current period is marked by a much less favorable macroeconomic environment. Global growth is expected to be around 3.2% to 3.3% in the coming years, below historical standards. Unemployment, although contained in some advanced economies, remains structurally high or precarious in many regions, while job quality remains a source of concern.
Inflation is more volatile, marked by successive shocks related to energy, geopolitical tensions, and monetary adjustments. But most importantly, the nature of debt has changed. Unlike post-war times, where borrowing fueled reconstruction and economic expansion, contemporary debt is largely crisis management debt. It has been used to absorb the effects of the 2008 global financial crisis, the COVID-19 pandemic, and recent slowdowns. Debt no longer primarily finances growth, but stabilization.
A Debt Without a Growth Narrative
Economic history shows that debt is not inherently a problem. It can be a powerful lever of transformation, provided it is backed by a dynamic of growth, innovation, and wealth creation. This is precisely what allowed, after World War II, the absorption of exceptional debt levels.
Today, the situation is fundamentally different. Global debt is reaching new heights, but it is no longer part of a structuring economic project. It no longer primarily finances expansion but crisis management.
The real challenge is not so much the level of debt, but the absence of an economic narrative capable of justifying and absorbing it. We are no longer in an economy that borrows to build the future, but in an economy that borrows to buy time.
By Mohammed Benchekroun
