Global Debt Now 3 Times More than World GDP
From Reuters:
Global debt levels have surged to a record $217 trillion, driven by a $3 trillion borrowing spree in the developing world, the Institute of International Finance said, warning of risks to emerging markets from short-term debt repayments.
The IIF, one of the most authoritative trackers of capital flows, said in a note late on Tuesday that global debt amounted to 327% of the world’s annual economic output (GDP) by the first quarter of 2017 and the rise was driven principally by emerging market borrowing.
While advanced economies continued to deleverage, cutting total public and private debt by over $2 trillion in the past year, the report found total debt in developing countries had risen by $3 trillion to $56 trillion.
This amounted to 218% of their combined GDP, five percentage points above the first 2016 quarter.
China accounted for $2 trillion of this rise, with its debt now at almost $33 trillion, led by households but also company borrowing the IIF said.
“Rising debt may create headwinds for long-term growth and eventually pose risks for financial stability,” the report said.
“In some cases, this sharp debt build-up has already started to become a drag on sovereign credit profiles, including in countries such as China and Canada.”
High debt levels may soon come into greater focus if central banks from the U.S. Federal Reserve to the European Central Bank start unwinding some of the stimulus they have pumped into world markets. U.S. interest rates are already on the rise, potentially boosting the dollar and global borrowing costs.
Recent ECB comments have also fuelled expectations it will announce a reduction in stimulus as soon as September . The Bank of International Settlements (BIS) this week urged policymakers to press on with rate rises notwithstanding financial market turbulence.
Higher global borrowing costs could weigh most heavily on those who took out dollar debt and will need to repay it or roll over in coming years.
The IIF report found that emerging markets had over $1.9 trillion of emerging bonds and loans falling due by end-2018, and 15 percent of this was denominated in dollars. The biggest redemptions were in China, Russia, Korea and Turkey, it said.
Emerging hard currency-denominated debt rose by $200 billion in the past year - growing at its fastest pace since 2014 - and 70 percent of this has been in dollars, the report found.
"Rollover risk is high," the IIF added.
So where do I believe placing some money, as a hedge to this inevitable sovereign debt crisis, is an intelligent move?
Might I suggest, here.
- Brandon
It is time for world governments to adopt Blockchain technology, as it is the best way to reduce financial transaction fees, eliminate corruption and allow the crowd to determine the value of currency. Blockchain based money is also decentralized, transparent and rewarding for all participants - talk of the Steemit community! Follow @BlockRush to receive Blockchain news.
@blockrush governments will undoubtedly adopt the technology. Any government who refuses to adapt to blockchain will watch as their economy is left out in the cold.
The question becomes how and when will governments implement blockchain use and regulate?
The hugest of bubbles...
...some serious sh$t @opinizeunltd
Just have to wonder whether the ultimate result of its bursting will be deflationary or inflationary (or some sort of hybrid). Cheers
Brother, I am portuguese, since 2010 our country is going systematic cut reforms and taxes increases just for the sake of paiyng of our national debt, guess what? The debt is still growing? It´s all a big fat Money laudering joke.
Followed you ;)
I am just seeing your comment now, my apologies @carlosdaniel! Every country on Earth is racing to print away weak economics and devalue their currency relative to others. So yes, I agree it's all a big fat money laundering scheme and it's a race to the bottom! At the very least, being aware of this allows us to understand why certain events occur and position ourselves accordingly. Best to you and glad to have you along.