Global debt rose again in 2023 to a new record level

Global debt rose again in 2023 to a new record level
February 21, 2024 – 17:41

Data monitored by the IIF show that global debt increased by 15 trillion dollars. Argentina is among those that increased the Debt/GDP ratio the most among emerging countries.

According to the latest data collected by the Institute of International Finance (IIF), More than $15 trillion was added to the mountain of global debt last year, bringing the total to new record of US$313 billion. It should be noted that this increase occurs after having registered a decrease of almost US$7 trillion in 2022. It is not a minor issue given the level of international interest rates and the pressure via expectations on bond markets.

More than half of last year’s increase came from developed markets, driven mainly by the United States, France and Germany. While in the emerging marketsdebt accumulation was mainly concentrated in China, India and Brazil.

TO sector level, governments experienced the largest increases in the dollar value of outstanding debt, followed by non-financial companies. Debt outside the financial sector reached $244 trillion, a figure that is now more than $45 trillion above pre-pandemic levels.

Debt versus percentage of GDP

In terms of global Gross Domestic Product (GDP), a certain moderation of debt ratios is observed since the World Debt-GDP Index experienced a decline of around 2 percentage points to almost 330% in 2023, representing the third consecutive annual decline. “However, the pace of moderation last year was significantly slower than in 2021-22, against a backdrop of slower economic growth and falling inflation,” the IIF notes.

In this regard, the think tank of international banking explains that the reduction in debt ratios was particularly notable in mature markets, driven largely by European countries. Malta and Norway They were the only mature market economies to record an increase in their total debt ratios. In stark contrast, the Emerging Market Debt/GDP Ratio Hit New High of 255%with the largest increases observed in India, Argentina, China, Russia, Malaysia and Saudi Arabia. On the other hand, Chile, Colombia, Türkiye and Poland experienced drops of around 10% in their total debt ratios.

Despite growth still below potential and rising interest expenses, the global economy is proving resilient to market volatility. borrowing costs, considers the IIF. “In fact, the new economic data has exceeded expectations in the main countries, which has caused a rebound in investor sentiment”, he adds.

This change has been accompanied by a significant rebound in lending activity earlier this year. “Particularly noteworthy is the increase in the emission of sovereign eurobonds on the part of the emerging markets, including low-income countries that have suffered considerably from limited access to international debt markets in recent years. If maintained, this optimistic feeling “It should also reverse the current deleveraging of European governments and non-financial companies in mature markets, which are now less indebted than in the pre-pandemic period,” the IIF analysts warn.

Source: Ambito

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