Global debt rises to 325% of world GDP at $215 tn, led by emerging markets

Global debt grew by $7.6 trillion in 2016, according to an IIF study

Global debt rose to 325 per cent of the world's gross domestic product (GDP) in 2016, totalling $215 trillion (172.39 trillion pounds), an Institute for International Finance (IIF) report released on Monday showed, boosted by the rapid growth of issuance in emerging markets.

Global debt grew by $7.6 trillion in 2016 compared with the prior year. Issuance rose from 320 per cent of GDP in 2015.

Emerging market debt saw a "spectacular rise" to $55 trillion outstanding in 2016, equal to 215 per cent of their GDP. This was driven mostly by non-financial corporate debt, the report said.

Emerging markets have raised nearly $40 trillion of new debt between 2006 and 2016, a significant acceleration from the roughly $9 trillion added between 1996 and 2006, according to the report.

 

Global debt has risen more than $70 trillion in the last decade to a record high for debt issuance, the institute said.

Developed market countries accounted for $160 trillion, the lion's share of global debt, reaching nearly four times, or 390 per cent of those markets' combined GDP.

The report found that the $32 trillion increase in developed market debt had been driven largely by governments, with the US and UK public sector debt having more than doubled since 2006. Japan and developed markets in Europe have seen an increase of about 50 per cent in the dollar value of their outstanding government debt.

The majority of the increase in emerging market indebtedness has been in local currency, which was more than $48.5 trillion as of the end of 2016 from around $43 trillion in 2015.