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

New UN rights report paints bleak picture in eastern DR Congo

Rule of Law: Commission launches infringement procedure to protect the independence of the Polish Supreme Court

The key takeaways of G7 Summit in Canada

Cyprus banks under scrutiny

6.1 billion EUR for sustainable fisheries and safeguarding fishing communities

Commission opens first European Innovation Council calls worth €1 billion

Human trafficking cases hit a 13-year record high, new UN report shows

The EU heads of State and Government about the result of the European Elections 2019

As monsoon rains pound Rohingya refugee camps, UN food relief agency steps up aid

Companies need help to overcome rising

Is Europe misjudging its abilities to endure more austerity and unemployment?

EU budget: Commission helps prepare new Cohesion programmes with Regional Competitiveness Index and Eurobarometer

EU investment budget for 2020: A boost for the climate

Darfur: Inter-communal tensions still high despite improved security, Mission head tells Security Council

Impossible Brexit options: WTO or new referendum?

Work and reforms of the UN ‘at risk’, Guterres warns Member States, amidst ‘record-level’ cash crisis

Mergers: Commission approves acquisition of Raytheon by UTC, subject to conditions

This is how AI can help you make sense of the world

Calculators didn’t replace mathematicians, and AI won’t replace humans

What lies ahead for the Korean Peninsula?

The Collapse of the Brazilian Health Care System

UN chief welcomes re-opening of key Gaza border crossing

COVID-19: latest on evaluation and authorisation of vaccines

It’s getting harder to move data abroad. Here’s why it matters and what we can do

To build back better, we must reinvent capitalism. Here’s how

Iraq: UN human rights report voices concern over conduct of ISIL fighter trials

15 years of risk: from economic collapse to planetary devastation

EU should set goal to end homelessness by 2030

These countries are the most peaceful – in 3 charts

European Investment Bank to borrow €70 billion in 2013

What are antibody tests and can they get the world back to work?

What’s everyone talking about at Davos 2020?

Inaction over climate emergency ‘not an option’ says UN Assembly chief

Why nature is the most important stakeholder of the coming decade

The New Year 2016 will not be benevolent to Europe

Brussels wins game and match in Ukraine no matter the electoral results

Charges against Baha’i in Yemen must be dropped: UN experts urge release of detainees

Reusable packaging: 6 benefits beyond sustainability

COP21 Breaking News_03 December: Transport Industry Drive for Improved Energy Efficiency and Electro-Mobility to Stem High Growth of Emissions

How cultural understanding can help in the cultural shock

Why skills are keeping CEOs awake at night

These are America’s most dangerous jobs

EU to give more power to national antitrust authorities in a bid to secure regulatory fines

Does May have enough time in Parliament to table a soft Brexit deal?

Japan’s population is shrinking by a quarter of a million people every year

The beginning of a revolution in healthcare

FROM THE FIELD: Keeping Morocco’s indigenous culture and conservation in balance

‘World has failed’ victims of genocide too often: Guterres

EU prolongs economic sanctions on Russia by six months

The EU Parliament unanimously rejects Commission’s ideas about ‘seeds’

This is how a smart factory actually works

Protecting European consumers: toys and cars on top of the list of dangerous products

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

Thousands returning to Nigeria’s restive Borno state ‘at risk’; UN ‘gravely concerned’

‘Stay together and step up’ action to meet Global Goals, ECOSOC President tells development forum

Commission welcomes the political agreement on the Common Provisions Regulation for shared management funds

European Business Summit 2014 Launch Event: “Energising Industrial Growth”

Everything you need to know about the coronavirus

The revenge of the fallen

How communities are dealing with economy, society and education in COVID-19 crisis     

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