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Date: 24-apr-2025
The International Monetary Fund (IMF) has released its latest Fiscal Monitor, projecting that global public debt will rise by 2.8 percentage points to 95.1% of GDP in 2025. This increase is attributed to escalating trade tensions, particularly due to recent U.S. tariff implementations, and a slowdown in global economic growth. The IMF warns that under severe scenarios, public debt could soar above 117% of GDP by 2027, levels not seen since World War II.
The IMF's downgrade of global growth forecasts to 2.8% for 2025 reflects the impact of heightened trade tensions and policy uncertainty. The U.S. has implemented significant tariff hikes, prompting retaliatory measures from trading partners, which collectively dampen global trade and economic activity. The resulting slowdown reduces government revenues while increasing expenditures, thereby exacerbating public debt levels.
Governments worldwide are grappling with increased fiscal deficits, projected to average 5.1% of GDP in 2025. The combination of higher defense spending, social support demands, and rising debt servicing costs places additional strain on national budgets. The IMF emphasizes the need for prudent fiscal consolidation to build resilience against future economic shocks.
To address the mounting debt challenges, the IMF advises countries to:
These measures aim to stabilize public finances, restore investor confidence, and support sustainable economic growth amid ongoing global uncertainties.
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