<\/p>\n
Global debt rose by US$2.1 trillion in the first half to US$312 trillion.<\/p>\n
Global debt hit a record high of US$312 trillion at the end of the second quarter, driven by borrowing in the United States and China, while a key debt ratio in emerging markets also scaled a fresh peak, data from a banking trade group showed.<\/p>\n
The Institute of International Finance (IIF), a financial services trade group, said on Wednesday (Sep 25) that global debt rose by US$2.1 trillion in the first half to US$312 trillion \u2013 a new high point after previous data was revised lower.<\/p>\n
The IIF flashed warning signs on the trend of ever-increasing government borrowing in its latest Global Debt Monitor report, forecasting global government borrowing would rise from its current level of US$92 trillion to US$145 trillion by 2030 and top US$440 trillion by 2050.<\/p>\n
\u201cWith the Fed\u2019s 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,\u201d the IIF report said.<\/p>\n
A big chunk of the borrowing was driven by energy transition in the face of climate change which was expected to account for over a third of the projected rise by 2050.<\/p>\n
\u201cThis poses significant challenges, as many governments are already allocating a growing share of their revenue to interest expenses,\u201d the report said.<\/p>\n
The US$2.1 trillion increase this year through June compares to US$8.4 trillion in the first half of 2023, IIF data showed.<\/p>\n
Apart from China and the US, India, Russia and Sweden also increased their debt, while other European countries and Japan saw a notable decline, the report said.<\/p>\n
The global debt-to-GDP ratio – an indicator on the ability to repay debt by comparing to what is being produced – has stabilised around 327 per cent-328 per cent, with output numbers partly buoyed by above-target inflation in major economies.<\/p>\n
In developed markets, that ratio reached its lowest level since 2018 driven by declines in household and non-financial corporate sectors borrowing.<\/p>\n
In contrast, emerging markets saw their debt ratio reach a new high of over 245 per cent of output, more than 25 percentage points higher than before the Covid-related lockdowns.<\/p>\n
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