‘Attack of the debt tsunami’: Coronavirus pushes global debt to record high

  • The IIF said global debt would break new records in the coming months to reach $277 trillion by the end of the year.
  • Among advanced nations, debt surged above 432% of GDP in the third quarter — a 50 percentage points increase from 2019.
  • In emerging markets, debt levels rose to over 248% of GDP, with Lebanon, China, Malaysia and Turkey experiencing the biggest rises in non-financial-sector debt.

 

LONDON — The coronavirus crisis pushed global debt levels to a new high of over $272 trillion in the third quarter, the Institute for International Finance said, as it warned of the “attack of the debt tsunami.”

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The institute said global debt would break new records in the coming months to reach $277 trillion by the end of the year. This would represent a debt-to-GDP ratio of 365%.

It comes after governments across the world stepped up support for companies and citizens in the face of a global pandemic which led to widespread stay-at-home orders. Businesses also had to look for alternative funding as activity came to a halt in the wake of Covid-19. Both events translated into higher borrowing and, therefore, more indebtedness.

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“Spurred by a sharp rise in government and corporate borrowing as the Covid-19 pandemic wears on, the global debt load increased by $15 trillion in the first three quarters of 2020 and now stands above $272 trillion,” the IIF said in its latest Global Debt Monitor, out on Wednesday.

Among advanced nations, debt surged above 432% of GDP in the third quarter — a 50 percentage points increase from 2019. The United States, which has implemented one of the biggest stimulus packages in the world, accounted for almost half of this rise.

www.cnbc.com/2020/11/19/coronavirus-drives-global-debt-to-a-new-record-high.html

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