Corona virus raises global debt to a new record

Corona virus raises global debt to a new record

A journalist picks up uncut bills of US $ 20 on July 12, 2012 at the U.S. Embroidery Bureau in Washington, DC.

Paul J. Richards | AFP | Getty Images

London – The Corona virus The crisis has raised global debt to more than $ 272 trillion in the third quarter, the International Credit Agency has warned of a “debt tsunami”.

Global debt is set to break new records in the coming months and reach $ 277 trillion by the end of this year, the company said. This represents a ratio of 365% of GDP.

This has led to widespread home stay orders after governments around the world stepped up support for companies and citizens in the face of a global epidemic. Businesses also had to look for alternative funding as operations were halted following Govt-19. Both cases translate into more borrowing and, therefore, more indebtedness.

“The global debt burden increased by $ 15 trillion in the first three quarters of 2020 and is now over $ 272 trillion, triggered by a sharp rise in government and corporate debt due to the plague of Govt-19,” IIF said in its latest Global. Credit tracking, Wednesday.

In developed countries, debt rose to more than 432% of GDP in the third quarter – a 50 percentage point increase from 2019. The United States, which has implemented one of the largest stimulus packages in the world, accounts for almost half of this increase.

The pace of global debt accumulation has been unprecedented since 2016.

In the eurozone, government action increased public debt by $ 1.5 trillion over the same period to $ 53 trillion. When dealing with the region’s sovereign debt crisis, it is even lower than the region’s all-time $ 55 trillion seen in the second quarter of 2014.

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In emerging markets, credit levels rose to 248% of GDP, while Lebanon, China, Malaysia and Turkey experienced the largest increases in non-financial sector debt.

However, corona virus infection is not the only factor contributing to the massive level of global debt.

“The pace of global debt accumulation has increased to an unprecedented $ 52 trillion since 2016,” the IIF said.

“While the $ 15 trillion increase in 2020 was recorded amid the Govt-19 epidemic, the increase in debt over the past four years is more than the $ 6 trillion increase over the previous four years.”

Large credit levels make governments, corporations and families more vulnerable during an economic downturn because they have to serve that debt.

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