This chart shows how global debt comes in waves – and, right now, we’re in the middle of the biggest one yet

(Credit: Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Victoria Masterson, Senior Writer, Formative Content


  • Since 1970, three debt waves have ended in financial crises for emerging and developing economies, according to the World Bank.
  • The fourth and current debt wave started in 2010 and was of serious concern even before COVID-19.
  • Global public debt will be at around 100% of GDP until 2025, says the International Monetary Fund.
  • Economic output is expected to recover as vaccines are rolled out, but the outlook for borrowing is harder to predict.

The world is currently experiencing unprecedented levels of debt, as governments continue to battle the coronavirus. But this is not the first time global debt has spiked.

There have been four waves of debt accumulation in the global economy since 1970, according to the World Bank.

These have occurred across more than 100 countries and have, so far, always culminated in financial crises in many emerging and developing economies.

The fourth debt wave, which is still ongoing, started in 2010 and – even before the COVID crisis – looked like being the worst yet.

“The size, speed and breadth of the latest debt wave should concern us all,” World Bank Group President David Malpass said at the launch of the World Bank’s study Global Waves of Debt: Causes and Consequences in December 2019, weeks before the start of what became the COVID-19 pandemic.

The fourth wave of global debt started in 2010 and is already the largest of them all. Image: IMF, World Bank

Ballooning debt

Since then, government borrowing has soared as countries battle to keep their economies afloat during global lockdowns.

In November 2020, the Institute of International Finance predicted that global debt would surge to $277 trillion by the end of that year, representing a debt-to-GDP ratio of 365%.

Around $12 trillion has been spent so far on unprecedented fiscal actions, including temporary tax cuts, loans and capital injections, the International Monetary Fund (IMF) found in its latest Fiscal Monitor.

Combined with economic stimulus measures already in the pipeline, this is forecast to push public debt globally to a record level of about 100% of GDP until 2025.

Unprecedented Fiscal Response to an Unprecedented Crisis
$12 trillion has been spent so far on the global response to COVID-19, according to Vitor Gaspar, Director of the IMF’s Fiscal Affairs department. Image: IMF

Listen here.

Lessons from the past

History shows it is not unusual that countries can keep borrowing even when default risk is high.

“A review of 89 default episodes from 1827 to 2003 shows the typical experience to be a sharp rise in borrowing, both external and domestic, in the run-up to default,” say the authors of a 2020 blog for the IMF, entitled The Debt Pandemic. “Ideally this time will be different, but the record is not encouraging.”

Historical data is vital in predicting future potential trends and government indebtedness is a key guide to economic health.

The IMF’s DataMapper tool includes data on central government debt going back to the 1950s and has an interactive timeline showing how the world’s debt map has changed over the decades.

In 1950, for example, government debt in the United States as a percentage of GDP was 78.2% – a year when the Korean War boosted growth and debt in the country, according to US personal finance site The Balance.

In the battle against COVID-19, forecasters expect economic output will recover as vaccines are rolled out, but say the outlook for borrowing is harder to predict.

“These growing debts have been manageable thanks to an extended period of low interest rates and loose monetary policy,” says financial writer Marcus Lu in a blog for the World Economic Forum. “But whether or not this is sustainable remains to be seen.”

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

A Sting Exclusive: “Regional Policy: a fully-fledged investment policy”, Commissioner Cretu reveals live from European Business Summit 2015

G20 starts to tackle inequality

This UK footballer just won free school meals for kids in the summer holidays

UN chief hopeful for Libya, after Quartet meeting in Tunis

Lithuania finds the ways to maintain its energy security

Climate change could be making forests shorter – this is how

Why carbon capture could be the game-changer the world needs

Covid-19 crisis shows supply chains need to embrace new technologies

Greece @ MWC14: Greek-born mobile champions at MWC 2014

Can we crack the hydrogen puzzle this time around?

The von der Leyen Commission: for a Union that strives for more

Is our brave new world about to burst?

More women in Latin America are working, but gender gap persists, new UN figures show

What the car industry has done to help fight climate change – and what it needs to do next

Only a few months away from the single European patent space

How the gender commuting gap could be harming women’s careers

Simple Technology Saving Lives: Remote Auscultation

How technology is driving a fourth wave of environmentalism

Why we need to solve our quantum security challenges

State aid: Commission approves Danish public financing of Fehmarn Belt fixed rail-road link

Home or office? Survey shows opinions about work after COVID-19

How AI is serving up aces at Wimbledon – and what the technology means for the future of sport

A lack of affordable homes is forcing young Britons to live with their parents

The benefits of a cashless society

Mergers: Commission refers acquisition of newly created joint venture by Telefónica and Liberty Global to the UK competition authority

In Tunisia, budding entrepreneurs can take a year off their job

This South Korean city once had the biggest coronavirus outbreak outside of China. Now it’s reported zero new cases

8 top stories from the week in Davos 2020

This is how much data we’re using on our phones

Palliative care and health coverage: informing is also universalizing

Mental Health in times of a pandemic: what can each individual do to lessen the burden?

MEPs call for new EU strategy to promote democracy in Russia

Russia is ready for its Phase 3 evaluation once it fulfills high-priority recommendation

Budget MEPs approve €104.2 m in EU aid to Greece, Spain, France and Portugal

What has COVID-19 taught us about decarbonized electricity grids?

The technologies – and thoughtful collaborations – that can build resilience in the food system after COVID-19

Foreign Affairs Council (Trade) of 22/05/2018: EU relations with key trading partners

Geopolitics and investment in emerging markets after COVID-19

Globally, youth are the largest poverty-stricken group, says new UN report

The UN’s unyielding effort to tackle sexual abuse and exploitation: our quarterly update

UN condemns Syrian ‘war on children’ as up to 30 reportedly killed in clashes

Road use charges: reforms aim to improve fairness and environmental protection

The EU’s Response to COVID-19

Nearly a third of the globe is now on Facebook – chart of the day

October’s EU strong digital mix: From Safe Harbour to Net Neutrality, Roaming and Snowden

Afghanistan: Civilian casualties caused by IEDs has reached ‘extreme levels’, UN warns

What is the biggest benefit technology will have on ageing and longevity?

After the George Floyd protests, what next for racial justice in the US?

How businesses can help solve society’s workforce problems

European Union: From financial consolidation to deeper political division

Why gin made from peas helps the environment

‘Severe’ new US asylum restrictions will put vulnerable families at risk, UN refugee agency says

MEPs demand safe and clean travel

European Semester 2018 Spring Package: Commission issues recommendations for Member States to achieve sustainable, inclusive and long-term growth

Q&A on extraordinary remote participation procedure

Earthquake: Monte Dei Paschi Di Siena

Big tech cannot crack down on online hate alone. We need to fund the smaller players

Governments and non-state actors need to take urgent action to meet Paris Agreement goals

Security Council should ‘nurture’ Colombian consensus against return to violence, top UN official urges

Palliative care and Universal Health Coverage: how to advocate for the inclusion of palliative care in UHC

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: