Stronger economic activity and higher inflation meanwhile, both of which erode debt levels, saw the global debt-to-GDP ratio drop over 12 percentage points to 338 percent of GDP, marking the second annual drop in a row.
Breaking the numbers down further, the IIF, a global banking trade group, estimated that the emerging market government debt-to-GDP ratio climbed to almost 65 percent of GDP in 2022 from just under 64 percent. Investment bank JPMorgan had a different take on the global debt situation, highlighting in an analysis published on Wednesday that despite last year’s modest falls in developed market debt, the rise since the global financial crash 15 years ago has been nothing short of explosive.
Based on a debt sustainability framework, they also estimated that primary balance – net lending excluding interest – of developed markets would need to improve 3.8 percent -points on average from its current level of ‑3.4 percent of GDP just to keep debt from rising.