Costly Debt May Hamper Future Investment Capacity
Governments and companies borrowed USD 25 trillion from markets in 2024, which is USD 10 trillion more compared to the pre-COVID period, and triple the amount raised in 2007, according to a new OECD report.
The OECD Global Debt Report 2025: Financing Growth in a Challenging Debt Market Environment shows that debt levels are expected to rise further in 2025, with the aggregate central government marketable debt-to-GDP ratio in OECD countries reaching 85%, more than 10 percentage points higher than in 2019 and nearly double the 2007 level.
Bond yields in several key markets rose despite policy rates falling, while both sovereign and corporate indebtedness increased. This combination of higher costs and higher debt risks restricting capacity for future borrowing at a time of significant investment needs. Past borrowing, a legacy of the 2008 financial crisis and COVID-19 pandemic, has been used primarily to cushion the impact of shocks and facilitate recovery. Now, significant new investment will be needed to advance medium- and long-term policy goals, including to boost growth and productivity, respond to population ageing and address defence needs.
“Sovereign and corporate debt levels continue to grow across the world, at a time of increasing borrowing costs and market volatility,” OECD Secretary-General Mathias Cormann said. “Increasing the efficiency of public spending, prioritising government borrowing for productivity enhancing public investment that enhances long-term growth and providing firms with incentives to ensure their borrowing enhances their productive capacity, will contribute to improving debt prospects.”
https://www.oecd.org/en/about/news/press-releases/2025/03/higher-and-more-expensive-sovereign-and-corporate-debt-risks-restricting-capacity-to-finance-future-investment-needs.html