A study released by the International Monetary Fund (IMF) indicates that soaring private debt is hampering countries' economic growth. However, the brake will vary between countries and within countries.

The record increase in private debt could slow the economic recovery. And for good reason, many states have managed to mitigate the economic shock of the pandemic by providing abundant liquidity to households and businesses hit by the crisis. This, via credit guarantees, concessional loans and moratoriums on interest payments. Global private debt jumped 13% of global gross domestic product in 2020, faster than it did during the global financial crisis, and almost as fast as public debt.

Low-income households and vulnerable businesses are generally less able to handle a high level of debt. The drag on future growth is therefore expected to be greater in countries where low-income households and vulnerable businesses have seen their debt increase the most during the pandemic.