Global debt has surged to a record high of $315 trillion (£250 trillion) as China and India continued their borrowing binge despite the risks posed by geopolitical tensions and higher interest rates.
The Institute of International Finance (IIF) warned that post-pandemic efforts to reduce debt were coming to an end as governments cut taxes and increase spending amid a record number of elections this year.
It said the increase was “primarily driven by emerging markets”, where debt surged to “an unprecedented high of over $105 trillion”.
This is $55 trillion more than a decade ago, with China, India and Mexico seeing the biggest increases so far this year.
China is already dealing with a property crisis that threatens to exert a drag on economic growth for years to come.
The International Monetary Fund (IMF) has also warned that India’s debt pile could exceed the size of its economy by the end of the decade as it spends billions of pounds each year dealing with natural disasters.
IIF analysis showed total world debt rose by $1.3 trillion to a new record high of $315 trillion in the first three months of the year as global debt-to-GDP “resumed its upward trajectory” after falling for a sustained period after Covid lockdowns.
The IIF added that increases in government debt drove the rise among advanced economies in the first three months of 2024 as stubborn US inflation threatens to keep interest rates higher for longer.
