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WASHINGTON: The International Monetary Fund on Wednesday said that the global debt as a share of economic output fell significantly in 2022 for the second year in a row, but the decline may be ending as a post-COVID growth surge fades.

The IMF said in an update to its Global Debt Database that the world’s total debt to-GDP ratio fell last year to 238% from 248% in 2021 and 258% in 2020.

But the decline for the past two years, driven by strong growth and stronger-than-expected inflation, has recouped only about two thirds of the COVID-induced spike in global debt. The ratio remains well above the 2019 level of 238% of GDP.

China has played a central role in increasing global debt in recent decades as borrowing outpaced economic growth, and its debt burden has defied the moderating trend, growing to 272% of GDP in 2022 from 265% in 2021.

Those levels are similar to the United States, which saw its total debt-to-GDP ratio fall to 274% in 2022 from 284% in 2021, according to the IMF report.

The world has been on a debt “rollercoaster” for three years, but debt is likely to rise again over the medium-term, and the IMF urged governments to adopt strategies to help reduce debt vulnerabilities – both in public debt, household debt and non-financial corporate debt.

“The rebound of real GDP growth is fading. Inflation is projected to stabilize at a low level over the medium term,” the IMF said. “If global debt resumes its rising rend going forward, the debt rollercoaster since the pandemic will look nothing more than a temporary deviation around its long-term rising trend.”

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