Global debt hits a record high, at whopping $250 trillion: Institute of International Finance

Washington: Institute of International Finance (IIF) warned that the global debt had risen to a whopping $250 trillion. The institution has blamed the world’s two leading economies of the United States and China, for the surge in debt. At the same time, investors and economists have expressed concerns over the massive debt on the global economy, raising fears over it crumbling under the enormous pressure.

The IIF recently released a report named the ‘Global Debt Monitor’, which highlights the deepening global debt crisis. The global debt had crossed the $240 trillion mark at the end of last year and has passed the $250 trillion mark already in the first half of this year. Considering the size of the Global GDP, the debt amounts to 320% of the world’s GDP. The emerging market economies have accumulated massive debts with such countries accounting for 220% of the world’s GDP.

Among the major economies of the world, the United States and China account for more than 60% of the total debt. The debt accumulated by the United States is over $110 trillion while China’s total debt tops $40 trillion. While talking about debt in various sectors, the IIF noted the debt with the Non-Financial corporates was the most. Also, as per the statistics the IIF has provided, the debt on such corporates was more than $75 trillion.

The government borrowings follow it by a close margin of $70 trillion, the report said. It underscored that while the borrowings were rapidly growing, in economies such as Italy, Brazil, South Africa, Argentina and Greece, the government debts were increasing tremendously. Additionally, the IIF drew attention to the fact that the consistent reduction in interest rates by the central banks and negative government bond yields were the two prime factors that ascribed for the ever-growing global debt.

NEW Global Debt Monitor: Global debt hit $246T in Q1 2019, nearly 320% of GDP.

Debt by sector, Q1 2019 (as % of GDP):
🔹Households: 59.8%
🔹Non-financial corporates: 91.4%
🔹Gov’t: 87.2%
🔹Financial corporates: 80.8% pic.twitter.com/4Qu0ekvpZw

— IIF (@IIF) July 15, 2019

The Institute of International Finance has forecast the global debt rise to cross the mark of $255 trillion by the end of 2019. On the other hand, the IIF underlined the concerns investors and economists had voiced. However, economists fear the collapse of the global economy under the tremendous pressure of debt. Last month, even the International Monetary Fund (IMF) had issued a similar warning on the global debt. Moreover, the IMF warned that if the current situation of the global economy, which was experiencing a slowdown persisted for a long duration, the borrowings by the private sector of nearly $19 trillion could be declared as ‘Bad Loans’.

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