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Top economies heading for biggest budget deficits since Covid, IMF warns

Major global economies are heading toward their largest budget deficits since the Covid pandemic, according to warnings issued by the International Monetary Fund. The fiscal deficits for advanced economies are projected to hit 5.2 percent of GDP this year, reaching the highest level recorded since 2021. The International Monetary Fund has urged wealthy nations to reduce borrowing and implement urgent fiscal reforms. Meanwhile, the organization also raised its overall forecast for global economic growth this year while cautioning that mounting debt, inflation risks, and potential market shocks could destabilize world financial stability.

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  • ✓ Advanced economies fiscal deficits will hit 5.2 percent of GDP this year, according to the International Monetary Fund.
  • ✓ The projected fiscal deficits for top economies are the highest recorded since 2021.
  • ✓ The International Monetary Fund raised its forecast for world economic growth this year.
🛡️ Source Corroboration: 12 independent reporting domains (95% confidence) ⏱ Read time: ~2 min

What changed

The International Monetary Fund released new projections showing advanced economies are heading toward a fiscal deficit of 5.2 percent of GDP this year.

Live updates

  1. IMF Warns Top Economies Face Largest Deficits Since Pandemic

    Major global economies are heading toward their largest budget deficits since the Covid pandemic, according to warnings issued by the International Monetary Fund. The fiscal deficits for advanced economies are projected to hit 5.2 percent of GDP this year, reaching the highest level recorded since 2021. The International Monetary Fund has urged wealthy nations to reduce borrowing and implement urgent fiscal reforms. Meanwhile, the organization also raised its overall forecast for global economic growth this year while cautioning that mounting debt, inflation risks, and potential market shocks could destabilize world financial stability.

    Why it matters

    The mounting fiscal strains across top economies threaten global financial stability as governments grapple with high debt and escalating inflation risks. The International Monetary Fund warned that bond yields could experience a disorderly spike amid these worsening economic pressures. And financial stability faces additional threats from potential risks tied to the artificial intelligence boom and share crashes.

    What is confirmed

    • Advanced economies fiscal deficits will hit 5.2 percent of GDP this year, according to the International Monetary Fund.
    • The projected fiscal deficits for top economies are the highest recorded since 2021.
    • The International Monetary Fund raised its forecast for world economic growth this year.

    Still unconfirmed

    • The International Monetary Fund cut China growth forecast to 4.5 percent.
    • The threat of an artificial intelligence share crash puts world financial stability at risk.

    What to watch next

    • Official bond yield movements and potential spikes in borrowing costs
    • Policy responses and borrowing cuts from rich nations urged by the International Monetary Fund
    Sources used for this update (12)
    1. www.forbes.com — Download The Forbes App
    2. The Guardian — Threat of AI share crash puts world financial stability at risk, says IMF
    3. Axios — IMF warns global economy nearing "limits of resilience"
    4. Financial Times — Top economies heading for biggest budget deficits since Covid, IMF warns
    5. CNBC — IMF warns bond yields could see a 'disorderly' spike as debt, inflation risks worsen
    6. Toledo Blade — IMF raises its forecast for world growth this year but warns of risks from AI boom and debt
    7. fortune.com — Hachette’s CEO says AI shortcuts are creating a ‘worse C-suite'
    8. www.businesspost.ie — Major economies head for biggest budget deficits since covid ...
    9. en.sedaily.com — Advanced Economies' Fiscal Deficits Hit Post-Pandemic High ...
    10. europeanbusinessmagazine.com — IMF Urges Rich Nations to Cut Borrowing Amid High Deficits
    11. economictimes.indiatimes.com — IMF sounds alarm on mounting fiscal strains as major ...
    12. streamlinefeed.co.ke — IMF Warns Top Economies Face Largest Deficits Since Pandemic
    confidence 95%
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