Major economies approach their largest budget deficits since the COVID-19 pandemic

The International Monetary Fund (IMF) has warned of deteriorating public finances in the world’s major economies. In 2026, budget deficits in China and the United States are expected to reach or exceed 8% of GDP, while net borrowing across advanced economies is projected to total 5.2% of GDP. This would be the highest level since 2021.

According to the IMF, net borrowing by the US general government sector will reach 8.5% of GDP in 2026, up from 7.1% in 2025 and 5.8% before the COVID-19 pandemic. The fiscal outlook has deteriorated compared with the IMF’s April projections amid turmoil in global debt markets.

At the same time, government borrowing costs are rising. Investors are concerned about growing public debt, inflation and large-scale investment in artificial intelligence. In September, a bond sell-off put additional pressure on government budgets as debt-servicing costs increased.

According to the IMF, global public debt is expected to approach 100% of world GDP by the end of the decade. The fund identified prolonged wars, cyberattacks and extreme weather events as factors increasing fiscal risks and exacerbating the global energy shock.

Meanwhile, the IMF slightly upgraded its forecast for global economic growth in 2026 by 0.1 percentage points to 3.1%. The global economy is projected to grow by 3.4% in 2027. The US economy is expected to expand by 2.3% in both years, while China’s growth is forecast at 4.5% in 2026 and 4% in 2027. India’s economy is projected to grow by 7% annually.