Global Debt Soars To Record $277 Trillion

The Institute of International Finance (IIF), whose members include some 400 major banks and financial firms around the world, estimates total global debt will hit a record $277 trillion by the end of this month, up from $255 trillion at the end of 2019. $277T is 365% of global GDP!

This year alone, as of the end of September, the world added $15 trillion to the debt pile, with government borrowing accounting for half of the increase, the IIF says. The surge in 2020 has been the largest by far since records have been kept, with countries spending like crazy as a result of the global pandemic.

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By 2030, the IIF estimates we could be looking at $360 trillion in total global debt, assuming the financial system doesn’t blow up in the meantime – which is a distinct possibility in my opinion.

Among advanced nations, debt surged above 432% of GDP in the 3Q — a 50 percentage points increase from 2019. The debt volume of developing countries is approaching 210% of their total GDP on average, up from 185% in 2019 and 140% a decade ago. The sharp decline in revenues has made debt servicing much more onerous for governments in developing countries, despite low borrowing costs.

The explosion in debt this year came after governments across the world stepped up support for companies and citizens in the face of a global pandemic that led to widespread stay-at-home orders. Businesses also had to look for alternative funding as activity for many came to a halt in the wake of Covid-19. Both events translated into higher borrowing and, therefore, more indebtedness.

The United States holds the largest amount of debt of any country, as I will discuss below. It is followed by the Euro Zone, the United Kingdom, France, and Germany as the world’s largest debtor nations. All have debt-to-GDP ratios in excess of 100%.

US National Debt Nears $27.5 Trillion, 129% of GDP

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