The International Monetary Fund (IMF) warned that new U.S. tariffs will drive global public debt to nearly 100% of global GDP by the end of the decade, surpassing pandemic-era levels.
The IMF’s latest fiscal projections estimate that public debt will increase by 2.8 percentage points, reaching 95.1% of global GDP by 2025, and continue rising to 99.6% by 2030. Global public debt had peaked at 98.9% of GDP in 2020 during the COVID-19 crisis, with governments borrowing heavily for relief efforts.
Although debt levels fell in the following years, they are now climbing again, with the IMF forecasting an accelerating upward trend.
The IMF cited the impact of major tariff announcements by the U.S., retaliatory measures from other countries, and heightened policy uncertainty as key factors contributing to the growing fiscal pressures. Governments are facing tough trade-offs, as higher defense spending, increased social support demands, and rising debt service costs strain budgets.
The report also noted that global fiscal deficits are expected to average 5.1% of GDP in 2025, compared to 5.0% in 2024, and higher than the 3.7% in 2022.
The IMF’s forecast for global GDP growth this year stands at 2.8%, but this could worsen if more tariffs are imposed or trade tensions escalate further. In a severely adverse scenario, global public debt could rise above 117% of GDP by 2027, marking the highest debt-to-GDP ratio since World War II.
The IMF highlighted that much of the debt growth is concentrated in larger economies, with one-third of its 191 member countries experiencing debt growth faster than pre-pandemic levels, accounting for about 80% of global GDP.
The report also warned of increasing demands for social spending, particularly in countries vulnerable to trade disruptions, adding pressure to government budgets. This comes amid a continued decline in development aid from wealthier nations, exacerbating fiscal challenges in developing economies.
In the U.S., the IMF expects slight improvement in annual budget deficits over the next two years, forecasting deficits of 6.5% of GDP for 2025 and 5.5% for 2026, down from 7.3% in 2024. This is due to increased tariff collections and strong economic performance in recent years.
China’s fiscal deficits are expected to grow sharply in 2025, to 8.6% of GDP, up from 7.3% in 2024, as the country continues to spend on economic stimulus measures. Despite the mounting debt pressures, the IMF reiterated its advice for countries to prioritize debt reduction and build fiscal buffers to manage future economic shocks.
The IMF emphasized the importance of implementing gradual consolidation plans and offsetting new spending needs with spending cuts or new revenues.
