Global Debt Reaches Record High

The global economy has reached a worrying milestone, with the total amount of global public and corporate debt exceeding $100 trillion for the first time in history during 2024. According to the annual report of the Organisation for Economic Co-operation and Development (OECD), more than $65 trillion of this massive amount is government debt, while nearly $35 trillion belongs to the corporate sector.

Over the past year, governments and companies have raised a record amount of nearly $25 trillion through bond issuance. This figure is almost three times higher than the data from 2007 and significantly exceeds pre-pandemic levels. These statistics clearly show that the global economy is increasingly dependent on debt financing, raising the risks of potential financial crises in the future.

Interestingly, the largest share of debt in 2024 was held by OECD countries, with the United States alone attracting two-thirds of the total amount. The world’s leading economies – the United States, Japan, France, Italy, and the United Kingdom – together account for more than 85% of the debt recorded in OECD countries. At the same time, developing countries account for only $2.8 trillion, which is relatively small in the global picture but remains a significant burden for these economies.

With financial obligations growing, it’s alarming that a significant portion of this debt is short-term. According to the OECD, 42% of global public debt and 38% of corporate debt must be repaid within the next three years. This means that countries and companies will face immense financial pressure in the near future, especially as global economic growth slows and political and geopolitical risks increase.

Although central banks have recently started lowering interest rates, these rates remain significantly higher than they were before the 2022 crisis. As a result, old cheap debt is gradually being replaced by more expensive debt, increasing financial costs and potentially setting the stage for a financial crisis.

Another alarming trend is that a substantial portion of corporate debt is not being used for investments but rather for refinancing old debt and distributing profits to shareholders. In this case, companies are not making the kind of investments that would increase profitability, thereby further worsening the financial environment.

Under these circumstances, OECD Secretary-General Mathias Cormann urges governments to manage public spending more effectively and increase investment in real economic sectors that enhance productivity. At the same time, companies should be encouraged to ensure that the funds raised through debt are directed toward production and productivity growth.

Overall, surpassing the $100 trillion mark in debt highlights the growing need for financing the global economy, but it also presents a real threat to long-term stability. With such high levels of debt, the economic and fiscal policies of countries must be adjusted to prevent potential crisis scenarios. Such an approach will be essential to overcoming significant challenges in the future.