Global debt shattering records: IIF

LONDON (Reuters) - Global debt is expected to climb to a new all-time high of more than $257 trillion in the coming months, the Institute of International Finance estimated on Monday, adding there was no sign of it retreating either.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., January 13, 2020. REUTERS/Brendan McDermid

The amount works out at around $32,500 for each of the 7.7 billion people on planet and more than 3.2 times the world’s annual economic output, but the staggering numbers don’t stop there.

Total debt across the household, government, financial and non-financial corporate sectors surged by some $9 trillion in the first three quarters of 2019 alone.

In mature markets total debt now tops $180 trillion or 383% of these countries’ combined GDP, while in emerging markets it is double what it was in 2010 at $72 trillion, driven mainly by a $20 trillion surge in corporate debt.

“Spurred by low interest rates and loose financial conditions, we estimate that total global debt will exceed $257 trillion in Q1 2020,” the IIF said, adding non-financial sector debt was now approaching $200 trillion.

Global government debt alone is set to break above $70 trillion.

China’s debt is fast approaching 310% of its GDP — one of the highest in emerging markets - and following a marked slowdown in 2017/18 when Beijing made a big push for deleveraging, there has been a pick-up again in corporate debt.

China’s government debt also grew at its fastest annual pace last year since 2009, the IIF said, and household debt and general government debt are now at all-time highs of 55% of GDP.

All parts are the world are loading up however. Household debt-to-GDP have reached a record high in Belgium, Finland, France, Lebanon, New Zealand, Nigeria, Norway, Sweden and Switzerland.

Non-financial corporate debt to GDP topped in Canada, France, Singapore, Sweden, Switzerland and the United States. Government debt-to-GDP has also hit an all-time high in Australia and the United States.

The IIF’s data is based on Bank for International Settlements and International Monetary Fund figures as well as its own.

Another potentially risky trend is that the amount of emerging market ‘hard currency’ debt - debt sold in a major currency like the dollar that can become hard to pay back if a crisis hits a local currency’s value - reached $8.3 trillion in Q3 2019, $4 trillion higher than a decade ago.

Dollar debt accounts for over 85% of this increase.

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Reporting by Marc Jones; editing by Jonathan Oatis