GLOBAL DEBT TO SOAR TO $277 TRILLION BY 2020-END, SAYS IIF

Thu 19 November 2020:

In the first three quarters of 2020, global debt increased by $15 trillion to reach $277 trillion by the end of the year as governments and companies continue to spend in response to the Covid-19 pandemic, the Institute of International Finance said in a report on Wednesday.

After a large surge in the global debt-to-GDP ratio (from 320% to 362% year-on-year in the first half), the increase in the third quarter was more modest, due to strong global recovery, the International Institute of Finance said on late Wednesday.

The global debt is expected to reach $277 trillion, 365% of world GDP, as of the end of this year.

As of the end of the third quarter, the debt-to-GDP ratio was 432% in mature markets while 250% in emerging markets.

On a global scale, non-financial corporates’ debt was $79.6 trillion, governments’ was $77.6 trillion, financial sector’s was $65.6 trillion and households’ was $49.2 trillion, as of the end of the third quarter. All sections posted increases on a yearly basis.

“There is significant uncertainty about how the global economy can deleverage in the future without significant adverse implications for economic activity,” the IIF said in its report. Total U.S. debt is on track to hit $80 trillion in 2020, the IIF report said, up from $71 trillion in 2019. In the Euro area, debt rose by $1.5 trillion to $53 trillion through September.

The global economy is forecast to shrink 4.4% this year and expand 5.2% in 2021 according to estimates from the International Monetary Fund as pandemic-induced lock downs and travel restrictions weigh on economic output.

The coronavirus has claimed 1.34 million lives worldwide and infected 56.2 million since it emerged last December.

Measures, such as curfews and travel bans, to stem the spread of the virus effected economic activity dramatically all around the world.

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