According to a report by the Institute of International Finance, the world is mired in debt of $315 trillion.
This global debt wave is the largest, fastest and most widespread debt growth since World War II, and it coincides with the Covid-19 pandemic.
“This growth marks the second consecutive quarter of growth, driven primarily by emerging markets, where debt has soared to unprecedented highs of more than $105 trillion, higher than more than a decade ago,” the Institute of International Finance said in the report. Reaching $55 trillion. Global Debt Monitor quarterly report released in May.
About two-thirds of the $315 trillion in debt comes from mature economies, with Japan and the United States having the largest debt burdens.
However, debt-to-GDP ratios in mature economies – considered a good indicator of a country’s ability to repay debt – have generally been falling.
On the other hand, emerging markets hold $105 trillion in debt, but their debt-to-GDP ratio hit a new high of 257%, pushing the overall ratio up for the first time in three years.
The report points out that China, India and Mexico are the largest contributors.
The Institute of International Finance believes that stubborn inflation, growing trade frictions and geopolitical tensions may pose significant risks to debt dynamics, “putting upward pressure on global financing costs.”
The Institute of International Finance added: “While the health of household balance sheets should provide a buffer against ‘increased longer-term interest rates’ in the short term, government budget deficits remain above pre-pandemic levels.”
Of the $315 trillion in debt stock, household debt (including mortgages, credit card and student debt, etc.) reached $59.1 trillion.
Commercial debt used by companies to fund their operations and growth is US$164.5 trillion, of which US$70.4 trillion is accounted for by the financial sector alone. The remainder is public debt of $91.4 trillion.
About The Author
