Abu Dhabi, UAEMonday 19 August 2019

Global debt reaches all-time high of $184 trillion, says IMF

The world’s top three borrowers - the US, China and Japan accounted for more than half the debt.

China is a recent addition to the global debt rankings, with its share ballooning from three to 15 per cent over the last decade. REUTERS
China is a recent addition to the global debt rankings, with its share ballooning from three to 15 per cent over the last decade. REUTERS

Debt worldwide reached a record-high of $184 trillion in nominal terms, a nearly 225 per cent of the GDP in 2017, according to a report by the International Monetary Fund.

The world’s top three borrowers - the US, China and Japan accounted for more than half the debt, significantly greater than their share of global output, the report added.

China’s addition to the rankings is however, relatively new, with its share of global debt only picking up at the start of the millennium, from less than three per cent to over 15 per cent, growing in parallel with the rapid credit surge that following its 2008 stimulus programme.

Much of the increase in global debt - by 12 per cent to GDP - has been a result of increase in both financial and non-financial debt, with public debt largely advanced by advanced economies, while emerging market economies are more reflective or a private debt surge.

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The paper also noted that the gap between the advanced G20 nations and emerging market economies remained “significant”, often exceeding 90 per cent of the GDP on average.

"Low-income countries are even more of an outlier, accounting for less than 1 percent of the global debt, well below their share of output,” it added.

Much of the force behind global indebtedness however has been the private sector, which tripled its debt levels since 1950.

"The global leverage cycle was dominated by advanced economies for almost six decades, with the debt of the non-financial private sector reaching a peak of 170 percent of GDP in 2009 and little deleveraging since,” said the report.

Emerging economies’ ascent is however a fairly new development, observed the IMF, with indebtedness beginning to accelerate only in 2005. However, these economies had become the major face behind global trends by 2009, it added.

Updated: December 15, 2018 03:54 PM

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