The International Monetary Fund has warned of escalating risks to the global economy as public debt approaches 100 percent of global GDP, surpassing its highest level since the aftermath of World War II.
IMF Managing Director Kristalina Georgieva said the global growth outlook for 2026 has improved to around 3 percent. However, widening global imbalances and a slowdown in the decline of inflation in several countries are creating additional pressures, alongside rising bond yields linked to financial challenges.
Georgieva also warned that the continued closure of the Strait of Hormuz is keeping the risk of an energy-market shock elevated, potentially placing further strain on the global economy.
The warning comes as global bond yields reach their highest levels in nearly two decades, driven by renewed inflation concerns stemming from surging oil prices and growing expectations that central banks, particularly the US Federal Reserve, will maintain tighter monetary policies.
Bond prices in Japan and Australia fell on Tuesday, while the yield on Japan’s 10-year government bonds reached 3 percent for the first time since 1996. The move followed a sell-off in US Treasury bonds that pushed 10-year yields to their highest level since January last year.
The Bloomberg Global Sovereign Bond Index also rose to 3.72 percent on Tuesday, its highest level since mid-2008 and its fourth consecutive session of gains.
