The world is mired in $315 trillion of debt, according to a report from the Institute of International Finance.<\/p>\n
This global debt wave has been the biggest, fastest and most wide-ranging rise in debt since World War II, coinciding with the Covid-19 pandemic.<\/p>\n
\u201cThis increase marks the second consecutive quarterly rise and was primarily driven by emerging markets, where debt surged to an unprecedented high of over $105 trillion\u2014$55 trillion more than a decade ago,\u201d the IIF said in its quarterly Global Debt Monitor report released in May.<\/p>\n
Around two-thirds of the $315 trillion owed originates from mature economies, with Japan and the United States contributing the most to that debt pile.<\/p>\n
However, the debt-to-GDP ratio for mature economies \u2014 which is seen as a good indicator of a country\u2019s ability to service its debts \u2014 has been falling in general. <\/p>\n
On the other hand, emerging markets held $105 trillion in debt, but their debt-to-GDP ratio hit a new high of 257%, pushing the overall ratio up for the first time in three years.<\/p>\n
China, India and Mexico were the biggest contributors, the report noted.<\/p>\n
The IIF identified stubborn inflation, rising trade friction and geopolitical tensions as factors that could pose a significant risk to debt dynamics, \u201cputting upward pressure on global funding costs.\u201d<\/p>\n
\u201cWhile the health of household balance sheets should provide a cushion against \u2018higher for longer rates\u2019 in the near term, government budget deficits are still higher than pre-pandemic levels,\u201d the IIF added.<\/p>\n
Of the $315 trillion debt stock, household debt, which includes mortgages, credit cards and student debt, among others, amounted to $59.1 trillion.<\/p>\n
Business debt, which corporations use to finance their operations and growth, stood at $164.5 trillion, with the financial sector alone making up $70.4 trillion of that amount. Public debt made up the rest at $91.4 trillion.<\/p>\n<\/p>\n
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