If you were worried about the debt of U.S.A then hold on to your heart because the figure for global debt is even more alarming. In a report issued by the Institute of International Finance in November last year the global debt hit a new high of over $250 trillion for the first half of 2019! According to the report, China and the US were two of the biggest contributors to global debt. The IIF said the overall number hit $250.9 trillion at the end of this period, and will exceed $255 trillion by the end of 2019.
The report stated,
“China and the U.S. accounted for over 60% of the increase.With few signs of slowdown in the pace of debt accumulation, we estimate that global debt will surpass $255 trillion this year,” the IIF said in the report.
The graph shown above shows the accumulation of global debt, it was around $100 trillion in 1999 and 2 decades later it is close to $300 trillion. Rising debt across the world has been a big concern for investors and has also been flagged as the next breaking point by a number of economists. Record-low interest rates make it extremely easy for corporates and sovereigns to borrow more money.
The IMF also warned at the end of 2019 that almost 40%, or around $19 trillion, of the corporate debt in major economies such as the U.S., China, Japan, Germany, Britain, France, Italy and Spain was at risk of default in the event of another global economic downturn.
The IIF cites the deepening of global bond markets as the reason for the rise in debt levels. The global bond markets increased from $87 trillion in 2009 to over $115 trillion in mid-2019.