The Institute of International Finance (IIF), a financial services trade group, reported an astounding surge in global debt, reaching an unprecedented peak of $313 trillion in 2023.
According to the IIF’s Global Debt Monitor, this record-breaking figure signifies an increase of more than $15 trillion in the last quarter of 2023 compared to the previous year, highlighting the monumental growth from approximately $210 trillion nearly a decade ago.
The IIF attributed around 55 percent of this surge in global debt to mature markets, with the United States, France, and Germany emerging as the primary contributors. Despite a slight decline of approximately 2 percentage points in the global debt-to-GDP ratio, settling at nearly 330 percent in 2023, certain emerging markets experienced a surge in the ratio, indicating potential challenges in debt repayments.
India, Argentina, China, Russia, Malaysia, and South Africa notably registered significant increases, raising concerns about their capacity to meet debt obligations.
The IIF noted that while the reduction in this ratio was particularly noticeable in developed countries, some emerging markets witnessed a fresh high in the reading, which signifies a country’s ability to repay debts.
The report underscored uncertainties surrounding US policy rates and the US dollar, which could potentially elevate market volatility and tighten funding conditions for countries heavily reliant on external borrowing.
Despite these concerns, the IIF highlighted the global economy’s resilience to borrowing cost volatility, leading to a resurgence in investor sentiment.
There’s a growing appetite for borrowing, especially in emerging markets, in 2024, as evidenced by increased international sovereign bond issuance volumes.
Significantly, countries such as Saudi Arabia, Mexico, Hungary, and Romania have engaged in substantial bond issuances, reaching an all-time high for January at $47 billion.
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