Global debt tops USD 320 trillion - Budget deficits and trade tensions could cause further growth
The stock of global debt rose by more than $12 trillion in the first three quarters of 2024, reaching a new record of nearly $323 trillion, a report from a banking trade group showed.
Large government budget deficits suggest sovereign debt could rise by a third by 2028, to around $130 trillion, the report from the Institute of International Finance, a financial services trade group, found.
"Rising trade tensions and supply chain disruptions threaten global economic growth, increasing the likelihood of small up-and-down cycles in sovereign debt markets as inflationary pressures re-emerge and public finances tighten," the report said. Also, rising interest costs could "exacerbate fiscal strains" and make debt management increasingly difficult.
The analysis comes as the world prepares for Donald Trump's return to the White House and his threats to impose trade tariffs on Europe, Mexico, Canada and China. The volatility of his policies has led some to borrow before he takes office in January, when markets may become less predictable.
But the rise in debt in the third quarter, which occurred before the U.S. election in November, was the third-largest quarterly increase on record, surpassed only by increases during the second and fourth quarters of 2020, when countries and companies rushed to borrow during the COVID-19 pandemic.
Economic growth, particularly in the United States, allowed debt-to-GDP to slide further, reaching approximately 326%, more than 30 percentage points lower than the all-time high level post-pandemic period .
Debt in emerging markets is approaching a record $105 trillion, 245% of GDP. Fully meeting global emissions reduction targets could add an additional $38 trillion to global debt by 2028, according to the Institute of International Finance.
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