Global Public Debt Exceeds $100 Trillion, Concentrated Among Major Economies

Today, global public debt exceeds $100 trillion, nearly 100% of global GDP. Beyond its magnitude, what is striking is its distribution. Global debt is heavily concentrated among the major advanced economies. The United States leads by a large margin with over $38 trillion in debt, followed by China (about $19 trillion) and Japan (nearly $10 trillion). Together, these countries hold nearly 60% of the world’s public debt. Major European economies, such as France, Italy, and Germany, also significantly contribute to this total. This observation highlights a fundamental paradox: global debt is primarily a debt of economic powers, those with the financial credibility and deep markets to attract global savings.

A Debt Transformed into a Global Financial Asset

Beyond its distribution, public debt has transformed in nature. Today, it is mostly issued in the form of sovereign bonds, traded in markets and held by a wide variety of actors: institutional investors, banks, international funds, and central banks. Since the 2008 crisis, the latter have played a decisive role by absorbing a significant portion of sovereign issuances. Institutions like the US Federal Reserve, the European Central Bank, and the Bank of Japan have contributed to maintaining exceptionally favorable financing conditions for over a decade. This evolution has led to a profound change: public debt is no longer just a tool of fiscal policy, it has become a central financial asset, integrated into global portfolios and essential to market functioning.

High Debt Levels Then and Now, But Opposing Trajectories

Looking back at economic history offers an enlightening comparison. At the end of World War II, public debt levels in major economies had already reached or exceeded 100% of GDP. However, this situation did not lead to sustained economic fragility.

On the contrary, the decades that followed were marked by an exceptional phase of prosperity. In the US, average annual growth ranged from 3.5% to 4% from the late 1940s to the 1970s, with unemployment rates around 4% to 5%. The UK, despite a debt exceeding 200% of GDP, often maintained unemployment below 3% in the 1950s and 1960s, with solid growth. In continental Europe, France and Germany recorded even more spectacular performances, with growth rates approaching 5% to 6% and near full employment. In other words, yesterday’s debt was an investment debt, directed towards production, urbanization, and structural transformation of economies.

Today: Similar Debt Levels, But Deteriorated Indicators

Unlike the post-war era, the current period is characterized by a significantly less favorable macroeconomic environment. Global growth is expected to hover around 3.2% to 3.3% in the coming years, below historical standards. Unemployment, although contained in some advanced economies, remains structurally high or precarious in many regions, while job quality remains a source of concern.

Inflation, on the other hand, is more unstable, marked by successive shocks related to energy, geopolitical tensions, and monetary adjustments. But above all, the nature of the debt has changed. Contrary to the post-war period, where borrowing fueled reconstruction and economic expansion, contemporary debt is largely crisis management debt. It has been used to absorb the effects of the 2008 global financial crisis, the COVID-19 pandemic, and recent slowdowns. Debt no longer primarily finances growth, but stabilization.

A Debt Without a Growth Narrative

Economic history shows that debt is not inherently a problem. It can be a powerful lever for transformation, provided it is linked to a dynamic of growth, innovation, and wealth creation. This is precisely what allowed, in the aftermath of World War II, the absorption of exceptional debt levels.

Today, the situation is fundamentally different. Global debt reaches new heights, but it no longer aligns with a structuring economic project. It no longer primarily funds expansion but the management of successive crises.

Mohammed Benchekroun