IMF warns of looming global debt crisis as Hungary faces mounting risks

According to the IMF’s latest report, the global economy is teetering on the brink of another financial crisis: global public debt has reached unprecedented levels, while Hungary is sliding deeper into trouble amid growing deficits and a slowing economy.

IMF: Global debt remains above 235% of world GDP

The International Monetary Fund (IMF) reported on Wednesday that an increase in government borrowing had offset the decline in private-sector credit, resulting in little overall change in total debt last year, which stood at 235% of global gross domestic product (GDP).

In its statement, the IMF noted that private debt had fallen below 143% of global GDP — the lowest level since 2015 — due to declining household debt and minimal changes in non-financial business debt.

By contrast, public debt rose to nearly 93%, according to IMF data, reflecting the aggregated and weighted debt levels of governments, businesses and households, as reported by Anadolu.

In US dollar terms, total debt edged up slightly to $251 trillion, with public debt rising to $99.2 trillion and private debt falling to $151.8 trillion.

“These global averages mask significant differences across countries and income groups. While the United States and China continue to play a dominant role in shaping global debt dynamics, our April Fiscal Monitor report highlights that in many countries, debt and deficit levels remain high and concerning compared with historical norms — both in advanced and emerging economies,” the IMF stated.

In the United States, public debt rose from 119% to 121% of GDP, while in China it increased from 82% to 88%.

In advanced economies excluding the US, public debt declined by more than 2.5 percentage points to 110% of GDP. “Growth in some large advanced economies, such as France and the United Kingdom, was offset by declines in Japan and smaller economies such as Greece and Portugal,” the report noted.

In developing economies excluding China, public debt dropped to below 56% on average.

According to the statement, governments should address these trends by prioritising credible medium-term fiscal adjustments aimed at reducing public debt. Creating an environment that stimulates economic growth and reduces uncertainty would help ease public debt burdens and encourage private-sector investment.

IMF: Hungary in difficult economic situation

An IMF fact-finding mission held talks in Budapest with Hungarian authorities between 5 and 17 June as part of its annual Article IV consultation. In the concluding statement of the visit, the IMF painted a bleak picture of Hungary’s economic situation. The organisation said the country’s economy had stagnated for three years, while inflation remained well above the central bank’s 3% target. Government measures that distort market dynamics — such as price caps, interest and margin limits, windfall taxes and subsidised loans — are fuelling uncertainty.

Outlook and risks

The IMF forecasts growth of just 0.7% in 2025, driven by consumption, with expansion reaching 2% in 2026. Inflation may fall to 4.5% by year-end but is unlikely to return to target levels before 2027. While the external balance may benefit from battery and automotive exports, several risks loom large: geopolitical tensions, energy price volatility, delays in receiving EU funds, and postponed fiscal adjustments could all weaken growth and undermine investor confidence.