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Global debt is likely to resume its rising trend after a dip last year, the International Monetary Fund warned, due to rebounding economic growth and stable inflation, as well as a sustained issuance of debt by China.

Total debt — government, private business and household — fell 10 percentage points to 238 percent of global GDP in 2022, the IMF said in its latest update of global debt on Wednesday. Private and government debt both declined from the previous year, with the latter erasing about half of its increase since the pandemic.

In the medium term, however, debt will likely continue to rise because the global rebound from pandemic restrictions is fading and inflation is projected to stabilise, the IMF said.

“Global debt appears to have returned to its historical upward trend,” the IMF said. “Managing debt vulnerabilities should be key.”

China was the biggest exception to the global debt reduction last year, as it issued more public debt to support its economy through lockdowns while also facing a relatively slow pace of inflation. Total debt in China rose 7,3 percentage points to 272 percent  of GDP in 2022, the IMF estimates.

“China has been an important force driving global debt in recent decades,” the IMF said in its report. “The rise in China’s debt ratio to GDP was unparalleled in other large economies.” China’s debt-to-GDP ratio has grown from about 70 percent in the mid-1980s, when it was near the average for most emerging economies, including a “considerably steeper” climb since 2009.

While that puts China’s debt-to-GDP ratio close to the US level of about 274 percent, it’s smaller in dollar terms — US$47,5 trillion compared with nearly US$70 trillion. – Bloomberg