Global debt stabilizes, but at a historically high level

Source: CritpoTendencia Original Title: Global debt stabilizes, but at a historically high level Original Link: Global debt remains above 235% of world GDP. The figure indicates an apparent stabilization after the sharp jump recorded during the pandemic, but does not imply a real correction of accumulated leverage. The global economic system is not reducing its dependence on debt; it has simply entered a pause phase after years of rapid expansion.

The key point is not just the absolute level, but the context. The global economy reaches this point with higher interest rates, uneven growth, and increasing fiscal tensions.

In this context, debt stabilization does not result from an orderly deleveraging process, but from increasingly visible financial limits. Debt stops growing at the same rate because the cost of sustaining it increases.

This scenario leaves the system in a fragile position: highly indebted, with less room for maneuver, and dependent on financial conditions that are no longer as benign as in the previous decade.

Less private credit, more prominence of the public sector

One of the most significant changes in the composition of global debt is the retreat of private credit. Households and non-financial corporations have slowed their borrowing, pressured by higher rates, stricter credit conditions, and a more uncertain macroeconomic environment.

This retreat of the private sector has not been offset by a general reduction in debt, but by greater prominence of the public sector. Governments have increased their debt levels to sustain growth, cover persistent fiscal deficits, and absorb part of the adjustment that the private sector can no longer handle.

The result is a gradual transfer of risk. Debt does not disappear; it shifts balance. In advanced economies, this process relies on strong currencies, deep markets, and greater financing capacity. In emerging and lower-income economies, the increase in public debt is often accompanied by greater external vulnerability, pressure on fiscal accounts, and less room for response to shocks.

A system operating on structural debt

The core message is clear: debt has become a structural component of the global economic system. It no longer acts as an exceptional tool to navigate crises but as a permanent stabilization mechanism.

When growth slows down, debt increases. When the private sector contracts, the state takes its place. The cycle repeats, but with an increasingly high baseline. In this context, debt stabilization does not eliminate risk; it only postpones it.

The challenge is not just how much is owed, but who bears that debt and under what conditions. With higher rates and uneven growth, the cost of maintaining high levels of debt becomes more apparent, especially in countries with less fiscal margin.

The global economy continues to advance, but on a structure increasingly dependent on public credit. Until there is a real reduction in leverage or a change in the growth model, debt will remain the silent pillar supporting—and tensioning—the system.