The world is drowning in $315 trillion in debt, according to a report by the Institute of International Finance.
This global debt wave was the largest, fastest and most widespread rise in debt since World War II, coinciding with the Covid-19 pandemic.
The Institute of International Finance said in its quarterly global debt monitor report issued in 2017: “This increase represents the second consecutive quarterly rise, and was driven primarily by emerging markets, where debt rose to an unprecedented level of more than $105 trillion – that is, $55 trillion.” $ more than it was a decade ago. maybe.
About two-thirds of the $315 trillion in outstanding debt comes from mature economies, with Japan and the United States contributing the largest to this debt pile.
However, the debt-to-GDP ratio in mature economies – which is seen as a good indicator of a country's ability to service its debt – is generally declining.
On the other hand, emerging market debt reached $105 trillion, but the debt-to-GDP ratio reached a new high of 257%, pushing the overall ratio higher for the first time in three years.
The report indicated that China, India and Mexico were the largest contributors.
The Institute of International Finance identified stubborn inflation, rising trade frictions, and geopolitical tensions as factors that could pose a significant risk to debt dynamics, “putting upward pressure on global financing costs.”
“While the health of household balance sheets should provide a cushion against ‘higher interest rates for longer’ in the near term, the government budget deficit remains higher than pre-pandemic levels,” the IIF added.
Of the $315 trillion in debt, household debt, which includes mortgages, credit cards and student debt, among others, amounted to $59.1 trillion.
Business debt, which companies use to finance their operations and growth, reached $164.5 trillion, with the financial sector alone accounting for $70.4 trillion of this amount. Public debt accounted for the remainder at $91.4 trillion.
