Debt burden on global economy at $305 trillion - Institute of International Finance warns

Washington – The international study group, Institute of International Finance (IIF), has warned that the debt burden on the world economy has reached $305 trillion. The IIF pointed out that factors such as the increasing ageing population in developed countries, growing expenditure on the healthcare sector, additional provision for defence due to geopolitical tensions and rising interest rates have contributed to the expansion of the debt burden. The study group also drew attention towards the load on the global economy has increased by $45 trillion, considering the debt that existed before the Coronavirus pandemic.

The IIF recently released a new report under the Global Debt Monitor, which draws attention to the alarming debt crisis in the global economy. By the end of 2019, i.e. before the Coronavirus pandemic, the debt burden on the worldwide economy was close to $260 trillion. However, in the next three and a half years, it came to the fore that there was an addition of as much as $45 trillion. At the end of the first quarter of 2023, the global economy has a debt of as much as $305 trillion.

In the first three months of the new year, the debt burden on the global economy has increased by as much as $8.3 trillion. IIF mentioned that this was the second time the loan had grown substantially in three months. The study group has made aware that the amount of debt is as high as 335% when considering the GDP of the international economy.

The IIF report has mentioned that the borrowing rate has been increasing in the countries known as emerging markets in the global economy. The study group said the total statistics of loans from emerging markets worldwide had reached $100 trillion. IIF noted that these countries include China, Mexico, Brazil, Turkey and India.

The Institute of International Finance claimed that various factors were responsible for the increase in debt burden. The number of senior citizens in developed countries has been increasing significantly. At the same time, due to the Coronavirus pandemic, there has been a huge increase in the expenditure on the healthcare system. In addition, due to geopolitical tensions at the international level, many countries have begun to increase their defence expenditure. Since the last year, leading central banks, including the United States, have raised interest rates, and there have been major changes in the currency value. IIF drew attention to the fact that all these have increased the number of loans. The study group has warned that this ratio will continue to grow in the future too, and the loan repayment issue may become serious.

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