Global debt to hit record $277 trillion by year end on pandemic spending splurge - IIF

By Rodrigo Campos NEW YORK (Reuters) - Global debt is expected to soar to a record $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. The IIF, whose members include over 400 banks and financial institutions across the globe, said debt ballooned already by $15 trillion this year to $272 trillion through September.

Reuters November 19, 2020 00:07:55 IST
Global debt to hit record $277 trillion by year end on pandemic spending splurge - IIF

Global debt to hit record 277 trillion by year end on pandemic spending splurge  IIF

By Rodrigo Campos

NEW YORK (Reuters) - Global debt is expected to soar to a record $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.

The IIF, whose members include over 400 banks and financial institutions across the globe, said debt ballooned already by $15 trillion this year to $272 trillion through September. Governments - mostly from developed markets - accounted for nearly half of the increase.

Developed markets' overall debt jumped to 432% of GDP in the third quarter, from a ratio of about 380% at the end of 2019. Emerging market debt-to-GDP hit nearly 250% in the third quarter, with China reaching 335%, and for the year the ratio is expected to reach about 365% of global GDP.

"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.

Among developing economies, Lebanon, China, Malaysia and Turkey have seen the biggest increases in non-financial sector debt ratios so far this year.

Emerging market governments' declining revenues have made paying down debt "much more onerous" even amid record low borrowing costs across the globe.

Through the end of next year, some $7 trillion of emerging market bonds and syndicated loans will come due, about 15% of which is denominated in U.S. dollars, IIF said.

Officials from the Group of 20 last month agreed to extend the Debt Service Suspension Initiative (DSSI) freeze on official bilateral debt payments to the first half of 2021 and said they would consider another six-month extension in April.

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.

(Reporting by Rodrigo Campos, Editing by Karin Strohecker and Toby Chopra)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.