Global debt to rise to $7 trillion in 2024 - High borrowing, slowing economic growth add to trade uncertainty
Global debt rose by about $7 trillion in 2024 to reach $318 trillion, a record annual level and one more reason for financial markets to be cautious, according to the Institute of International Finance.
Total debt, as a share of gross domestic product, also rose for the first time in four years as economic growth slowed, the group, which represents the global financial industry, said in a report. It predicted borrowing would remain high this year, particularly in the United States, France, China, India and Brazil.
The institute said the rising debt burden means governments need to be "ware of bond vigilantes," or investors who raise interest rates in an attempt to force policymakers to rein in budget deficits and debt.
“Growing scrutiny of fiscal balances, particularly in countries with highly polarized political landscapes, has been a defining feature of recent years,” the group said. “While market reactions to rising U.S. debt levels have been relatively muted, despite the country’s debt remaining on a “path of instability,” robust economic activity, rising productivity, and the safe-haven status of the U.S. Treasury continue to mask deep vulnerabilities in U.S. fiscal balances. Not all countries enjoy such privileges, however.”
Debt growth in 2024 was, however, below the $16 trillion added in 2023, and the Institute projected a slower pace of overall borrowing this year given the uncertain outlook.
“Looking ahead, we anticipate a further slowdown in global debt accumulation,” the group said. “With global economic policy uncertainty at record levels, well past the peak of the pandemic, and borrowing costs still high, more cautious stance among borrowers is likely to dampen private sector demand for credit,” the report said.
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