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Global debt grew to $315 trillion in 2024
The world is mired in $315 billion in debt, according to a report from the Institute of International Finance.
This wave of global debt has been the largest, fastest and broadest increase in debt since World War II, coinciding with the Covid-19 pandemic.
“This increase marks the second consecutive quarterly increase and was driven primarily by emerging markets, where debt reached an unprecedented high of more than $105 billion – $55 billion more than a decade ago,” the IIF said in its report. Global Debt Monitor quarterly report released in May.
About two-thirds of the $315 billion owed comes from mature economies, with Japan and the United States contributing the most to that pile of debt.
However, the debt-to-GDP ratio of mature economies — which is seen as a good indicator of a country’s ability to pay its debts — has been declining overall.
On the other hand, emerging markets held $105 trillion in debt, but their debt-to-GDP ratio reached a new high of 257%, pushing the global ratio up for the first time in three years.
China, India and Mexico were the biggest contributors, the report noted.
The IIF identified persistent inflation, increased trade friction and geopolitical tensions as factors that could pose a significant risk to debt dynamics, “putting upward pressure on global financing costs”.
“While the health of household balance sheets should provide a buffer against ‘higher rates for longer periods’ in the near term, government budget deficits are still higher than pre-pandemic levels,” the IIF added.
Of the debt stock of 315 billion dollars, household debt, which includes mortgages, credit cards and student debt, among others, amounted to 59.1 billion dollars.
Corporate debt, which companies use to finance their operations and growth, stood at $164.5 billion, with the financial sector alone accounting for $70.4 billion of that amount. Public debt represented the remainder at US$91.4 trillion.
