According to the Institute of International Finance, global debt increased by $10 trillion in the first half of 2023, resuming its upward march as a percentage of the global GDP after declining for nearly two years as inflation soared.
According to a report released on Tuesday by the organisation representing the biggest worldwide banks and financial institutions, liabilities reached a record $307 trillion, an increase of a “staggering” $100 trillion over the previous ten years. The recent development was driven by the US, Japan, the UK, and France.
Global debt as a percentage of GNP increased to 336% from 334% at the end of last year, and the IIF predicts that it will reach 337% by the end of 2023, mostly due to huge government budget deficits. That is however less than the 362% mark attained in the first quarter of 2021.
Liabilities reached a record $307 trillion, up a “staggering” $100 trillion over the previous ten years, according to a study released on Tuesday by the group representing the largest banks and financial institutions in the world. The US, Japan, the UK, and France were the driving forces behind the recent advancement.
The IIF projects that, mostly as a result of enormous government budget deficits, global debt as a proportion of GNP would reach 337% by the end of 2023, up from 334% at the end of last year. However, that is lower than the 362% threshold reached in the first quarter of 2021.
At their two-day meeting beginning on Tuesday, Federal Reserve Chair Jerome Powell and his colleagues are largely anticipated to maintain interest rates after raising them by more than five percentage points over the previous 18 months. Whether that will signal the end of the Fed’s most aggressive credit-tightening effort in decades is a topic of debate among investors.
The institute expressed concern about the high levels of public debt, focusing on liabilities in local currencies, particularly in emerging and frontier regions.
The research stated that “Domestic government debt levels are at alarming levels in many countries.” The global financial architecture is not sufficiently prepared to manage risks related to pressures in domestic debt markets, which is particularly concerning.