Global debt hits $323 trillion; repayment risks increase

Global debt has reached over $320 trillion, increasing by more than $12 trillion in the first nine months of 2024.

This surge is attributed to lower borrowing costs and increased risk appetite.

Sovereign debt is projected to rise by a third by 2028, nearing $130 trillion, which raises repayment risks globally.

The IIF warns that rising trade tensions and supply-chain disruptions could threaten economic growth, leading to volatile cycles in sovereign debt markets.

This volatility may be aggravated by inflation pressures and tightening public finances, increasing debt management challenges.

Trump’s return

The report arrives amid speculation about Donald Trump’s return to the White House and potential trade tariffs on key economies, which has prompted some entities to issue debt preemptively.

The debt increase recorded in the third quarter was significant, marking the third-largest quarterly rise historically, following spikes in mid-2020 during the pandemic.

Economic growth, especially in the U.S., has helped lower the debt-to-GDP ratio to about 326%, significantly lower than its peak during the pandemic.

Debt in emerging markets is nearing $105 trillion, accounting for 245% of their GDP.

Rapidly rising debt service costs are being observed, particularly in developed countries.