New York (TIP)- Global debt hit a record high of $312 trillion at the end of the second quarter, driven by borrowing in the United States and China, data from a banking trade group showed.
The Institute of International Finance (IIF), a financial services trade group, said on Wednesday that global debt rose by $$2.1 trillion in the first half to $312 trillion. That marked a new high point after previous data was revised lower.
The IIF cautioned about the trend of ever-increasing government borrowing in its latest Global Debt Monitor report. It forecast that global government borrowing would rise from its current level of $92 trillion to $145 trillion by 2030, and would top $440 trillion by 2050.
“With the Fed’s new easing cycle expected to accelerate the pace of global debt buildup, a significant concern is the apparent lack of political will to address rising sovereign debt levels in both mature and emerging market economies,” the IIF report said.
A big chunk of the borrowing was driven by energy transition in the face of climate change, which was expected to account for over one-third of the projected rise by 2050.
“This poses significant challenges, as many governments are already allocating a growing share of their revenue to interest expenses,” the report said.
Big country, big borrower
The $2.1 trillion increase this year through June compares with $8.4 trillion in the first half of 2023, per IIF data. Beyond China and the US, India, Russia and Sweden also increased their debt. Other European countries and Japan saw a notable decline, the report said.
The global debt-to-GDP ratio — an indicator of the ability to repay debt by comparing to what is being produced — has stabilized around 328%, with output numbers partly buoyed by above-target inflation in major economies.
In developed markets, that ratio reached its lowest level since 2018 driven by declines in household and non-financial corporate sectors borrowing.
In contrast, emerging markets saw their debt ratio reach a new high of over 245% of output, more than 25 percentage points higher than before the COVID-related lockdowns.
Source: Reuters
Global debt hits record $312 trillion, with climate finance a challenge: IIF
