The Strategist

IIF: Global debt returns to growth

07/11/2018 - 15:28

The volume of global debt in January-March 2018 increased by $ 8 trillion, to $ 247 trillion, and this is already 318% of global GDP. This figure was $ 222.6 trillion in the first quarter of 2017. Quarterly growth was recorded for the first time since the third quarter of 2016, it follows from the calculations of the Institute of International Finance (IIF).

The debt load of the corporate sector for the year increased by $ 8.1 trillion, to $ 73.5 trillion, the public debt - by $ 6.3 trillion, to $ 66.5 trillion, household debts - from $ 41.4 trillion to $ 46.5 trillion, financial sector debts - from $ 55.6 trillion to $ 60.6 trillion. Debts of the corporate sector reached a maximum in Canada, France and Switzerland. The level of public debt has grown most in Brazil, Saudi Arabia, Nigeria and Argentina. In China, the burden on households was almost 50% of GDP.

The IIF indicates that credit risks keep growing against the background of less uniform growth of the world economy and higher rates of the US Federal Reserve. Interest payments of developing countries on public debt now make up about 2% of GDP; their total debt in foreign currency reached a peak of $ 5.5 trillion in the first quarter (78% in the corporate non-financial sector). Until the end of next year, developing countries have to pay off debts by $ 2.7 trillion. On average, a third of this debt load is held in foreign currency, but this figure exceeds 75% in Argentina, Colombia, Egypt and Nigeria, 62% - in Mexico, 57% - in South Africa, 50% - in Brazil, 47% - Turkey. The risk of negative consequences from the outflow of capital for Argentina, Hungary, Turkey, Poland and Chile is the highest, the IIF notes. In developed markets, in turn, borrowers are more dependent on floating-rate debt, which is an additional risk (38% of corporate bonds in this category belong to the United States and Italy, and on average 10% in emerging markets).