Global Debt Hits Record $365 Trillion, Rising Sharply in Half Year

The Institute of International Finance (IIF) revealed that total global debt surged by over $10 trillion in the first half of 2023, reaching a record high exceeding $365 trillion. This significant increase was largely driven by emerging markets. In its latest "Global Debt Monitor" report, the IIF explained that debt in emerging markets grew by $6.5 trillion to more than $110 trillion, led by China, while debt accumulation in advanced economies slowed sharply. The overall increase was less than half the $21 trillion added in the same period last year. This was due to several factors negatively impacting borrowing, including higher interest rates, increased debt servicing costs, rising energy prices, and the conflict with Iran. Governments and non-financial corporations accounted for most of this rise, with both sectors recording new record levels. Global debt reached approximately 310% of global GDP, about 25 percentage points below its peak in early 2021. However, the IIF noted that this largely reflects the impact of inflation in boosting nominal GDP, rather than a genuine reduction in debt levels. This report comes as US Treasury bond yields have jumped to multi-year highs, leading to increased government refinancing costs.