How are Public Debts Evolving?

With the Covid-19 pandemic and the measures taken to support the economy during the crisis, the level of public debt has significantly increased worldwide. Many developed economies had a public debt exceeding 100 percent of their gross domestic product (GDP) by the end of 2021. However, with the return of growth, the average public debt has decreased globally. Inflation has also played a role in reducing the debt-to-GDP ratio by inflating certain tax revenues.

As shown in our chart based on data from the IMF and Trading Economics, in the United States, the level of public debt was 128 percent of GDP in 2021 and is expected to be around 133 percent of GDP by the end of 2023—an increase of 5 percent. Major economies in Europe, such as Germany, the United Kingdom, Italy, and Spain, also show a decline in their debt-to-GDP ratio since 2021 (by 6 percent to 7 percent).

Elsewhere in the world, it is observed that the debt-to-GDP ratio has increased during the period studied in China, India, the United States, and Japan. Despite being synonymous with prosperity and technological progress, Japan, the Land of the Rising Sun, is the second most indebted nation on the planet (after Venezuela), with a public debt expected to reach 263 percent of its GDP in 2023, an increase of 3 percent over two years.