JOIN USMany governments, especially in the developed world, have resorted to massive stimulus measures to bolster their economies since the 2008 global financial meltdown.
“Public debt outstanding (measured as marketable government debt securities) stood at US$41.1 trillion at the end of 2010, an increase of nearly US$25 trillion since 2000. “This was the equivalent of 69 per cent of global GDP, 23 percentage points higher than in 2000.
In just the past two years, public debt has grown by US$9.4 trillion — or 13 percentage points of GDP,” global consultancy McKinsey said. Last year alone, government debt accounted for about 80 per cent of the overall growth in total outstanding debt. According to the McKinsey report, government debt worldwide was US$31.7 trillion in 2008.
The report pointed out that budget deficits have increased due to stimulus packages and loss of revenues due to anaemic growth. Meanwhile, overall outstanding debt worldwide has more than doubled in the past 10 years to US$158 trillion in 2010. In 2000, the same stood at US$78 trillion.
“Debt also grew faster than GDP over this period, with the ratio of global debt to world GDP increasing from 218 per cent in 2000 to 266 per cent in 2010,” McKinsey said. Around US$48 trillion of the total debt outstanding was that of governments and financial institutions.
In both the US and Western Europe in 2010, the ratio of public debt stood at more than 70 per cent of the GDP, the report said.