US and China debt overflow may trigger global economic turmoil- IMF

Posted on April 22, 2024   |  

The International Monetary Fund (IMF) urges both the U.S. and Chinese governments to act now to reduce future borrowing.

IMF is concerned about the significant impact that rising debts could have on the global economy and interest rates worldwide.

IMF projections show a substantial increase in U.S. government debt relative to economic output by 2053, with a 70% rise expected.

Both countries are expected to contribute to a global surge in government debt, which is forecasted to reach 98.8% of economic output by 2029, up from 93.2% in 2023. Other major contributors include the U.K. and Italy.

By 2029, the IMF expects U.S. government debt to reach 133.9% of annual GDP, compared to 122.1% in 2023. 

China's debt is projected to rise to 110.1% of GDP by the same year, up from 83.6%.

Despite concerns, the U.S. government plans to continue selling bonds, with another $386 billion expected in May. 

This trend is likely to continue regardless of the outcome of the upcoming presidential election.

While China's budget deficit decreased to 7.1% of GDP in 2023 from 7.5% the previous year, the IMF predicts a gradual increase to 7.9% by 2029.