EditorialUS debt dysfunction puts the global economy at risk
America’s inability to get its financial house in order risks market turmoil at home and spillovers abroad
Total US debt accelerated from 119.9 per cent of GDP to 122.8 per cent between the fourth quarter of 2024 and the fourth quarter of 2025. It now stands at a whopping US$39 trillion.
There is little chance that the full debt will ever be repaid. As the old saying goes, if you owe the banks US$1 million, it’s your problem. But if you owe them US$1 billion, it’s their problem. Well, US debt is the world’s problem.
Now add to this an open-ended, costly war in the Middle East that is pushing up energy prices and unleashing inflationary pressure on a global economy already facing myriad challenges.
A looming debt crisis in the US will inflict extraordinary harm at home and abroad. That is the alarming conclusion of the International Monetary Fund, which warned that rising US public debt presents a “growing stability risk” to both the American and global economies.
The US might not feel like a nation in fiscal distress, given the size of its economy and the global dominance of its largest corporations, but as a well-known saying goes, bankruptcy happens gradually and then suddenly.