Worthy Christian News > World News > IMF: China and US Levels of Borrowing May Have “Profound” Effect on Global Economy

IMF: China and US Levels of Borrowing May Have “Profound” Effect on Global Economy

by Karen Faulkner, Worthy News Correspondent

(Worthy News) – The International Monetary Fund has warned that the US and China should each ensure they start borrowing less as their respective debt levels may have a “profound” effect on interest rates paid by other countries and on the economy worldwide, the Wall Street Journal reports.

The IMF issued its warning in a bi-annual report on government borrowing published Wednesday.

The IMF noted that while other countries have implemented measures to reduce their debt relative to the size of their economies, the US and China have not, the WSJ reports.

The Fund now expects that the US government debt relative to economic output will increase by 70% by 2053, and that China’s debt will increase by over 50% by the same year, WSJ reports.

US government debt is forecast to be 133.9% of annual gross domestic product in 2029, up from 122.1% in 2023, and China’s debt is expected to rise to 110.1% of GDP in 2029, up from 83.6% in 2023.

Moreover, the IMF warned that the US and China will lead a rise in global government debt to 98.8% of economic output in 2029, up from 93.2% in 2023, WSJ said.

The Fund noted in its report that Italy and the United Kingdom must also rein in their spending.

“The increase will be led by some large economies, for example, China, Italy, the United Kingdom, and the United States, which critically need to take policy action to address fundamental imbalances between spending and revenues,” the IMF said.

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