LONDON, Sept. 14 (Reuters) – World debt rose to a new record of nearly $ 300 trillion in the second quarter, but the debt-to-GDP ratio declined for the first time since the onset of the pandemic as economic growth slowed. He recovered. Institute of International Finance (IIF) said Tuesday.
Total debt levels, which include government, domestic and corporate and bank debt, increased by $ 4.8 trillion to $ 296 trillion at the end of June, after a slight decrease in the first quarter, to be $ 36 trillion above the pre-pandemic levels.
“If borrowing continues at this rate, we expect global debt to exceed $ 300 trillion,” said Emre Tiftik, IIF’s director of sustainability research.
The rise in debt levels was the steepest among emerging markets, with total debt increasing by $ 3.5 trillion in the second quarter from the previous three months to nearly $ 92 trillion.
In a positive sign for the debt outlook, the IIF reported a decline in the global debt-to-GDP ratio for the first time since the outbreak of the coronavirus crisis.
Debt as a percentage of gross domestic product fell to about 353% in the second quarter, from a record 362% in the first three months of this year.
The IIF said that of the 61 countries it monitored, 51 recorded a decline in debt-to-GDP levels, mainly due to a strong rebound in economic activity.
But he added that, in many cases, the recovery had not been strong enough to bring debt ratios back to pre-pandemic levels.
According to the IIF, the total debt-to-GDP ratio excluding the financial sector is below pre-pandemic levels in only five countries: Mexico, Argentina, Denmark, Ireland and Lebanon.
China has seen a steeper rise in its debt levels compared to other countries, while emerging market debt excluding China rose to a new record of $ 36 trillion in the second quarter, driven by a rise in public debt.
The IIF noted that after a slight decline in the first quarter, debt among developed economies, especially the euro area, rose again in the second quarter.
In the United States, the accumulation of debt of about $ 490 billion was the slowest since the start of the pandemic, although household debt increased at a record rate.
Globally, household debt increased by $ 1.5 trillion in the first six months of this year to $ 55 trillion. The IIF noted that nearly a third of the countries in its study saw an increase in household debt in the first half.
“The rise in household debt has been in line with rising house prices in almost every major world economy,” said IIF’s Tiftik.
Meanwhile, total sustainable debt issuance has surpassed $ 800 billion so far this year, the IIF said, and global issuance is projected to reach $ 1.2 trillion in 2021.
Report by Dhara Ranasinghe; Editing by Tommy Wilkes and Emelia Sithole-Matarise
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