Global debt hit a record high of over $250
trillion dollars in the first half of 2019, led by a surge in borrowings in the
United States and China.
The report released by the International Institute of Finance (IIF) on Thursday, shows that global debt surged by $7.5 trillion in the first six months of 2019, hitting $250.9 trillion at the end of the first 6 months period, and is expected to exceed $255 trillion by the end of 2019.
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“China and the U.S. accounted for over 60% of
the increase and with few signs of slowdown in the pace of debt accumulation,
we estimate that global debt will surpass $255 trillion this year,” IIF said in
Rising debt across the world has been a big concern for investors and has also been flagged as the next breaking point by a number of economists, record-low interest rates make it extremely easy for corporates and sovereign countries to borrow more money.
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The International Monetary Fund (IMF) last month
escalated its warnings about high levels of risky corporate debt, which have
been exacerbated by persistent low interest rates from central banks.
Further stating that almost 40% or around $19 trillion of the corporate debt in major economies such as the U.S., China, Japan, Germany, Britain, France, Italy and Spain was at risk of default in the event of another global economic downturn.
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The cites the deepening of the global bond markets as the reason for the rise in debt levels, stating that the global bond markets increased from $87 trillion in 2009 to over $115 trillion in mid 2019, which now make up 47% of the global bond markets compared to 40% in 2009.