Global debt reached a new high of over $300 trillion in the 2nd period, however, the debt-to-GDP proportion fell for the very first time because the crisis began as economic growth recovered, according to the Institute of International Finance (IIF) on Tuesday.
The debt burden, which includes government, family, business, as well as bank debt, increased $4.8 trillion to $296 trillion at the end of June, following a small drop during the first quarter, to remain $36 trillion higher than what was before pandemic levels.
The growth in overall debt amounts was the most significant among emerging economies, with overall debt increasing by $3.5 trillion in the 2nd period compared to the previous three months to over $92 trillion.
The statements of the Institute of International Finance
The Institute of International Finance recorded a decrease in the worldwide debt-to-GDP ratios for the very first time since the emergence of the flavivirus epidemic, which is a positive indication for the debt forecast.
Debt as a percentage of GDP decreased to about 353 percent in the second quarter, down from a historic high of 362 percent in the first 3 months of this year. Besides, it should also be noted that according to the Institute of International Finance, 51 of the 61 nations it tracked saw a decrease in debt-to-GDP levels, owing primarily to a robust comeback in the general economic activity.
the Institute of International Finance added, however, that in a lot of situations, the rebound was not strong enough to bring debt levels back down to pre-pandemic conditions. Due to the IIF statements, only five nations have overall debt-to-GDP ratios that are lower than pre-pandemic stages including Mexico, Argentina, Denmark, Ireland, as well as Lebanon.
China’s debts have risen more rapidly than those of other nations, whereas emerging-market loans excluding China reached a new record high of $36 trillion in the 2nd period of the year, mainly to an increase in government borrowing. On top of that, another noticeable thing is that according to the Institute of International Finance, following a modest reduction in the first quarter, loans in developed countries, particularly the eurozone, increased once again in the second quarter.
In the U.S, debt growth of about $490 billion was the lowest because of the fact that the epidemic began, despite household debt increasing at a record rate. International household debt increased by $1.5 trillion to $55 trillion in the first 6 months of the year. According to the Institute of International Finance, over a third of the nations in its survey experienced a rise in debt levels in the first half. Nevertheless, the overall sustainable debt issuance has reached $800 billion years too far, according to the IIF, with worldwide issuance expected to reach $1.2 trillion in 2021.