Global debt rose for the second quarter in a row, reaching $315 trillion, according to the International Institute of Finance (IIF).
This growth has become the most significant and fastest since the Second World War.
The key factor behind this leap is developing countrieswhere debt has reached unprecedented levels – more than 105 trillion dollars, What $55 trillion more than ten years ago. Two-thirds of the world's debt is in developed economies, with Japan and the United States leading the way.
Despite the rise in overall debt, debt-to-GDP ratios have fallen in developed countries, providing some encouraging signs for the future. However, there remains strong concern about the “next day” in the US, especially if Donald Trump returns to the White House and follows through on his commitment to generous tax cuts for US businesses.
On the other hand, the debt-to-GDP ratio in emerging markets rose to a new high of 257%. The figure rose for the first time in three years, highlighting growing debt servicing difficulties in these countries.
The IIF warns that factors such as persistent inflation, rising trade restrictions and geopolitical tensions could pose significant risks to debt dynamics, putting upward pressure on global funding costs. Already, the growing debt of major Western countries is causing central banks to sound the alarm, as The US and Europe are becoming increasingly vulnerable in an environment where large investments in production are a one-way street to increase competitiveness.
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