Emerging market government debt soars to record 59% of GDP -JPMorgan

LONDON, Nov 16 (Reuters) - Debt levels of emerging market governments ballooned to record highs in 2020 and are expected to continue rising next year, JPMorgan said in a note on Monday, as policymakers battle to restart economies battered by the coronavirus pandemic.

General government debt across 55 developing nations jumped to an all-time high of 59.0% of gross domestic product in 2020, with levels ex-China rising to 57.7%, JPMorgan analysts found.

Private sector credit in emerging markets also soared to an all-time high of 146.8% of GDP, closing in on levels seen in developed markets, where the average stands at 161%.

However, China with its very high debt levels lifted the overall ratio with levels across emerging markets ex-China rising to 89.9%, JPMorgan Analysts added.

“The COVID-19 shock has led to the largest annual increases in both EM government and private sector debt as a % of GDP,” JPMorgan analysts wrote in the note.

“Governments have needed to extend fiscal support to hard-hit economies but the overall levels of debt across EM will leave a legacy that market participants will be grappling with through the next business cycle.”

JPMorgan also added that both general and private sector debt were still overwhelmingly domestic, with local debt making up 87% of general government debt and 94% of private sector credit. (Reporting by Karin Strohecker in London Editing by Matthew Lewis)