After a year of the COVID-19 pandemic, the world has become more indebted and there is even more borrowing ahead. Governments, companies have borrowed $24 trillion in the last year for fighting against the economic loss due to the pandemic.
Key Points
- This borrowing in the last year has brought the global debt total to an all-time high of $281 trillion by the end of 2020.
- As per the Institute of International Finance (IIF), it is more than 355 percent of the global GDP.
- Even when vaccines have been rolled out, low central bank policy rates are keeping issuance above pre-pandemic levels.
- As per IIF estimates, the debt is set to increase another $10 trillion this year by the governments with big budget deficits as political and social pressures make it hard to curb spending, pushing this group’s debt load past $92 trillion by end-2021.
- Even amid historically muted credit spreads, global debt markets have started selling off, pushing up sovereign yields. Long-term US Treasury yields reached the highest in about a year this week.
- In mature economies, increases in non-financial industry debt-to-GDP ratios in Spain, France, and Greece were among the sharpest, as governments rapidly ramped up borrowing.
- As per IIF data, in emerging markets, China saw the biggest increase in debt ratios the previous year. China is followed by Turkey, Korea, and the United Arab Emirates.
Other than this, it should be noted that non-financial corporates have started relying on more government support. The debt ratios of financial corporates were highest (first year-over-year rise) since 2016.
