The global debt mountain has now grown to $247 trillion, up $30 trillion since Q4 2016, according to the latest IIF report. However, what’s even more worrisome in the trend is that the Global debt-to-GDP exceeded 318% in Q1 2018—the first quarterly increase since Q3 2016. In the latest quarter ended June-18, the global debt rose by over $8 trillion -fastest pace since Q1 2016.
Further, there has been a significant rise in most sectors with the household, non-financial corporate and general government sectors seeing their debt rise to $186 trillion in Q1. While financial sector debt reached an all-time high of some $61 trillion.
“The global debt-to-GDP ratio (318%) rose for the first time in over a year. With global growth losing some momentum and becoming more divergent, and U.S. rates rising steadily, worries about credit risk are returning to the fore—including in many mature economies,” Institute of International Finance said in a report.
The report noted that there is record levels of corporate and household debt in mature markets: Non-financial corporate debt is now at record highs in Canada, France and Switzerland. “Since Q1 2017, Switzerland and Denmark have seen a big rise in household debt since Q1 2017. Government debt to-GDP ratios have surged in the U.S., Australia and Greece, though Germany has seen a notable decline,” IIF said in the report.
Taking stock of the debt position in the emerging markets, the firm said that total EM debt (ex-financials) rose by $2.5 trillion to a new record of $58.5 trillion in Q1. Over the past year, Colombia, Argentina, and Philippines have seen a sharp increase in corporate debt-to-GDP ratios; in contrast, Turkey and China have seen some decline, IIF said, adding that household debt to-GDP levels have risen notably in China (to almost 50%), Chile (over 45%) and Colombia (30%).