Post by account_disabled on Feb 22, 2024 2:57:37 GMT -5
The global economy's debt hit a new high in the first half of this year, while debt as a proportion of gross domestic product is rising again after nearly two years of declines, according to the Institute of International Finance. Total debt, spanning sovereigns, businesses and households, rose by $10 trillion to around $307 trillion in the six months to June, the IIF said in its global debt monitoring report published on Tuesday. The previous peak in global debt occurred in early 2022, before central banks began aggressively raising interest rates. Global debt as a proportion of GDP, which had been falling due to high inflation, rose to 336 percent in June this year, an increase of 2 percentage points from the beginning of the year.
It remains below the peak of around 360 percent reached during the coronavirus pandemic. The rise in debt comes as higher interest rates in most countries raise borrowing costs, a key determinant Pakistan Phone Number of sovereign credit ratings. It also comes as climate transition financing puts pressure on governments to increase spending. "Our concern is that countries will have to allocate more and more to interest expenses," said Emre Tiftik, lead author of the IIF report. "It will have long-term implications for countries' financing costs and debt dynamics." The IIF said more than 80 percent of additional debt in the first half of the year came from mature markets, with the United States, Japan, the United Kingdom and France the largest increases. “Rising interest bills are a key risk to public finances and sovereign ratings, particularly in developed markets,” said Edward Parker, managing director of Fitch Ratings, the credit rating agency that downgraded the United States.
This is most likely because you are not logged in or JavaScript is disabled in your browser. Developed markets' interest bills remained stable in nominal terms between 2007 and 2021, despite rising debt levels. "But that free lunch is gone and interest payments are now rising faster than debt or income," Parker said. According to the report, debt interest costs are expected to continue rising as more debt is refinanced and interest rates are kept higher to combat inflation. On Tuesday, the OECD warned that central banks should keep interest rates at high levels or raise them further to defeat inflation despite growing signs of economic stress. The IIF said it was particularly concerned about an increase in interest expenses on local currency emerging market debt, which now accounts for more than 80 percent of total emerging market interest costs.
It remains below the peak of around 360 percent reached during the coronavirus pandemic. The rise in debt comes as higher interest rates in most countries raise borrowing costs, a key determinant Pakistan Phone Number of sovereign credit ratings. It also comes as climate transition financing puts pressure on governments to increase spending. "Our concern is that countries will have to allocate more and more to interest expenses," said Emre Tiftik, lead author of the IIF report. "It will have long-term implications for countries' financing costs and debt dynamics." The IIF said more than 80 percent of additional debt in the first half of the year came from mature markets, with the United States, Japan, the United Kingdom and France the largest increases. “Rising interest bills are a key risk to public finances and sovereign ratings, particularly in developed markets,” said Edward Parker, managing director of Fitch Ratings, the credit rating agency that downgraded the United States.
This is most likely because you are not logged in or JavaScript is disabled in your browser. Developed markets' interest bills remained stable in nominal terms between 2007 and 2021, despite rising debt levels. "But that free lunch is gone and interest payments are now rising faster than debt or income," Parker said. According to the report, debt interest costs are expected to continue rising as more debt is refinanced and interest rates are kept higher to combat inflation. On Tuesday, the OECD warned that central banks should keep interest rates at high levels or raise them further to defeat inflation despite growing signs of economic stress. The IIF said it was particularly concerned about an increase in interest expenses on local currency emerging market debt, which now accounts for more than 80 percent of total emerging market interest costs.