IMF warns public debt nearing global output

International Monetary Fund Managing Director Kristalina Georgieva has warned of the continued increase in global economic risks, as public debt approaches nearly 100% of GDP — the highest level since the aftermath of World War II. Although global growth forecasts for 2026 have improved to around 3%, pressures are still rising due to increasing economic imbalances, sluggish inflation reduction in some countries, and rising bond yields resulting from financial challenges. Reports also indicate that the ongoing closure of the Strait of Hormuz could trigger energy supply shocks. Meanwhile, global bond yields have reached their highest levels in two decades, amid ongoing inflation concerns driven by rising oil prices and expectations of tighter monetary policies by central banks such as the U.S. Federal Reserve. Japanese and Australian bond yields have reached unprecedented levels in years, coinciding with a wave of selling in U.S. bonds. The Bloomberg sovereign bond index has climbed to its highest point since 2008, reflecting debt markets’ sensitivity to inflation, energy prices, and monetary policies amid growing public debt levels and geopolitical risks.

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