Global debt hits all-time high

RT
Wed, 20 Sep 2023 15:23 UTC

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The figure is 50% higher than a decade ago, according to a leading trade body...

The global debt pile soared by $10 trillion to a record high of $307 trillion in the first half of 2023, the Institute of International Finance (IIF) reported on Tuesday. It added that the US, UK, and Japan are among the markets driving the rise.

The high interest rate environment seen across most economies has sent the figure surging, making the current debt stock $100 trillion higher than it was a decade ago, according to the IIF.

"After witnessing declines of seven consecutive quarters, the global debt-to-GDP ratio has resumed its upward trajectory in the first two quarters of this year, now hovering around 336% - up from 334% in Q4 2022," the report stated.

Over 80% of the debt buildup came from mature markets, with the US, Japan, the UK, and France registering the largest increases. In emerging markets, the rise has been more pronounced in China, India, and Brazil, the IIF said.

The report also warned that domestic government debt is at "alarming levels" in many emerging market countries. Meanwhile, "consumer debt burdens remain largely manageable in mature markets, allowing additional room for further central bank tightening should inflationary pressures persist," the IIF stated.

Comment: Case in point:

Britain will face one of the highest inflation rates of any major developed economy this year, the Organization for Economic Cooperation and Development (OECD) revealed on Tuesday.

UK inflation, which only recently fell to single digits for the first time since last summer, will average 7.2% this year, the Paris-based organization said in its latest Economic Outlook report.

The rate of price growth in the UK was the fastest among the Group of Seven (G7) major industrialized nations and the third fastest across the Group of Twenty (G20). Economists attributed this to fuel price fluctuations.

The OECD downgraded the UK's growth forecast for 2024 from 1% to only 0.8%, pointing to the "significant risks" the country is facing.

The UK's economic outlook has dimmed since June, following fourteen consecutive interest rate hikes by the Bank of England that have squeezed the country's output. Even with a moderate rebound next year, the OECD predicted that Britain will be lagging behind the vast majority of the G20 countries.

The report said:

"Activity has already weakened in the euro area and the United Kingdom, reflecting the lagged effect on incomes from the large energy price shock in 2022 and the comparative importance of bank-based finance in many European economies."

The OECD maintained its estimated 0.3% growth in British GDP this year, which, if realized, would be the second worst economic performance among the G7 after Germany, which has already entered a recession.

Like dominoes falling.