The global debt reaches a staggering $312 trillion, with the United States and China leading the borrowing trend, according to data from the Institute of International Finance (IIF). This record high is driven by government borrowing, with a forecasted increase to $145 trillion by 2030 and a projected $440 trillion by 2050. The IIF warns of the lack of political will to address rising sovereign debt levels, especially in the face of increasing energy transition costs due to climate change.
Despite a slight decrease in the global debt-to-GDP ratio in developed markets, emerging markets see a new high of over 245% of output, a significant increase from pre-COVID levels. This trend poses challenges as governments allocate more revenue to interest expenses.
Overall, the surge in global debt raises concerns about sustainability and the ability to repay, especially in emerging markets. Investors and policymakers must monitor these developments closely to mitigate financial risks and ensure economic stability.