Upcoming Webinar :Register now for 'ULIP as an investment during economic recovery' powered by Bajaj Allianz

Global debt hits record high of 331% of GDP in first quarter: IIF

While the rise in debt levels was well below average quarterly gains seen from 2015 to 2019, the pace of global debt build-up by governments, companies, financial institutions and households had accelerated since March, it said.
Jul 16, 2020 / 09:13 PM IST

Global debt surged to a record $258 trillion in the first quarter of 2020 as economies around the world shut down to contain the coronavirus pandemic, and debt levels are continuing to rise, the Institute for International Finance said on Thursday in a report.

The IIF, which represents global banks and financial institutions, said the first-quarter debt-to-GDP ratio jumped by over 10 percentage points, the largest quarterly surge on record, to reach a record 331 percent.

While the rise in debt levels was well below average quarterly gains seen from 2015 to 2019, the pace of global debt build-up by governments, companies, financial institutions and households had accelerated since March, it said.

Overall gross debt issuance hit an “eye-watering” record of $12.5 trillion in the second quarter, compared with a quarterly average of $5.5 trillion in 2019, the IIF said. It noted that 60 percent of those issues came from governments.

“While increasing debt levels raise concerns about debt sustainability, over 92 percent of government debt is investment-grade,” the report said.

COVID-19 Vaccine

Frequently Asked Questions

View more
How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

View more
Show

Debt in mature markets topped 392 percent of GDP, up from 380 percent in 2019, with the rise in debt ratios outside the financial sector most pronounced in Canada, France, Norway and the United States. U.S. debt made up half of the total $185 trillion of debt in mature markets.

Debt-to-GDP ratios jumped to 230 percent in emerging markets in the first quarter from 220 percent, but the U.S. dollar value of debt fell by $700 million to $72.5 trillion, largely due to a depreciation in emerging market currencies against the U.S. dollar, the IIF said.
 It said China’s debt across all sectors was on track to hit 335 percent of GDP after increasing to 318 percent in the first quarter from 302 percent, the largest quarterly surge on record. About 60 percent of the debt build-up was due to non-financial corporates, it said.


The group said some $3.7 trillion of emerging market debt would come due through the end of 2020, and was set to rise to $4 trillion in 2021.
Reuters
Sections