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US, China to drive global debt beyond $255-trillion mark by year-end; hit record high in H1 2019

FE Online
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debt, debt trap, how to get out of debt trap, how to clear debt, loan, credit card debt, high interest rates

Days after IMF chief Kristalina Georgieva reportedly said the global debt rising to a new all-time high of $188 trillion — about 230 per cent of the world output, Institute of International Finance (IIF) in its recent report claimed the amount to went up by $7.5 trillion to $250.9 trillion at the end of first half of 2019 — 320 per cent of the World GDP and will cross the $255-trillion mark by the end of this year — mostly driven by the surge in borrowings in the US and China. With limited room for further monetary easing, debt service costs will be an increasing constraint on fiscal policy, according to the report adding that the US and China contributed for more than 60 per cent of the rise in debt.

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"With no sign of a slowdown, we expect the global debt load to exceed $255 trillion in 2019," the said adding that the high-debt countries will have a much harder time coming up with funding to address climate risks. It said that the global government debt will hit $70-trillion mark this year vis-a-vis $65.7 trillion in 2018 due to the rise in the US federal debt. The IMF had last month had further warned about high levels of risky corporate debt, which have been made worse by persistently low-interest rates from central banks, CNBC reported. The IMF had warned that nearly 40 per cent, or around $19 trillion, of the corporate debt in leading countries including China, Japan, the US, France, Germany, Britain, Spain and Italy were at risk of default in the event of another global economic meltdown.

IMF Chief Georgieva had urged steps, as reported by PTI, to make sure 'borrowing is more sustainable' including bringing more transparency in lending practices and preparing for debt restructuring with 'non-traditional lenders' - referring to China as it has been a leading creditor to developing nations including in Africa.