Fitch: Global Debt Hits All-Time High of $66B, 80% of World GDP

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We are ‘worst prepared’ for a crisis in the post-war era, IIF CEO says from CNBC.

via CNBC:

  • Government debt hit $66 trillion through the end of 2018, or about 80 percent of global GDP, according to Fitch Ratings.
  • An official at the agency said the high debt levels could hamper countries as financial conditions tighten.
  • While developed market debt has stayed fairly stable since 2012, that hasn’t been the case in the U.S., which has seen its IOU surge by 44 percent.

 

Governments are continuing to run up huge debt levels, with emerging countries helping push the total global IOU to 80 percent of gross domestic product.

The worldwide tab through 2018 is now up to $66 trillion as measured in U.S. currency terms, about double where it was in 2007, just as the financial crisis was beginning to unfold, according to Fitch Ratings’ new Global Government Debt Chart Book released Wednesday.

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“Government debt levels are high, leaving many countries poorly positioned for financial tightening as global interest rates begin to move higher,” James McCormack, Fitch’s global head of sovereign ratings, said in a statement.

After a decade in which global central banks kept interest rates low and made running up debt far less expensive, monetary policy is in a normalization period. The U.S. Federal Reserve, for instance, has raised interest rates eight times since late 2015, and its counterparts around the world are ending the extreme easing conditions from the financial crisis.

Debt in developed countries has remained fairly steady, around $50 trillion, since 2012, though that’s not true of the U.S. Total public debt for the American government has jumped from $15.2 trillion to $21.9 trillion, or 44 percent, during the period, Treasury Department data show.

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Fitch noted that the total U.S. debt is nearly 10 times the size of France, Germany, Italy and the U.K. combined.

While the U.S. debt stands out among larger economies, it has plenty of company in the developing world.

Fitch said emerging market economy debt surged 50 percent in the period since 2012, from $10 trillion to $15 trillion. Leaders during that time proportionately were the Middle East and North Africa, with a 104 percent increase, and sub-Saharan Africa at 75 percent. Those two regions, though, have less than $1 trillion each in debt.

The 11 sovereigns rated “AAA” carry 40 percent of the debt load. Lower-rated “B” countries accounted for about 3 percent of global government debt.

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