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Global Debt-to-GDP Ratio Hit an All-Time High Last Year

(Bloomberg) –The global debt-to-GDP ratio hit an all-time high of 322% in the third quarter of last year, according to a report released Monday by the Institute of International Finance.

Debt rose by almost $10 trillion to $252.6 trillion from a year earlier, said the Washington-based IIF, which is comprised of the world’s leading financial institutions. Debt from all sectors — ranging from household to government to corporate bonds — surged.

Sector Household Non-Financial Corporates Government Financial
Mature $34.3 $43.1 $52.5 $50.2
Emerging $13.2 $31.3 $16.7 $11.3
Total $47.5 $74.4 $69.2 $61.5
$ Trillions

 

“While borrowing costs remain very low, many countries are finding a debt-driven growth model increasingly difficult to maintain,” said Sonja Gibbs, managing director of global policy initiatives at the institute. “High and rising debt-to-GDP ratios are making debt service and refinancing more challenging, and the 2020s are likely to see a greater incidence of debt distress and restructuring.”

The U.S. general government debt to GDP rose to about 102% of GDP, the IIF said, up 1.6 percentage points from a year earlier. Government debt in China grew at its fastest annual pace since 2009.

The institute expects “low interest rates and loose financial conditions,” to push total global debt to exceed $257 trillion the the first quarter of 2020.

Government debt-to-GDP hit a new high in the U.S. and Australia. Household debt-to-GDP reached a record high in Belgium, Finland, France, Lebanon, New Zealand, Nigeria, Norway, Sweden and Switzerland.

The IIF noted that a sharp rise in general government debt in Djibouti, Tajikistan, Mongolia Uzbekistan, the Maldives, Kenya and Pakistan is associated with direct loans from China.

Emerging market debt grew to $72.5 trillion from $66.1 trillion in the third quarter of 2018, according to the IIF, driven in large part by a jump in non-financial corporate borrowing. More than $19 trillion of syndicated loans and bonds will mature this year, with almost a third of that coming from emerging markets.

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