/View.info/ The Institute of International Finance (IIF) regularly monitors the amount of global debt and its main components. The total global debt indicator consists of the following types of debt: 1) government; 2) household sector; 3) non-financial companies and organizations; 4) financial sector.
The latest IIF figures are as of the end of the third quarter of 2023. By this time, total global debt has reached $307 trillion. At the beginning of the year, the figure was $297.5 trillion. Thus, the increase in global debt in three quarters amounts to $9.5 trillion .
This year, the “psychological barrier” of 300 trillion dollars was overcome. Over the last ten years (i.e. compared to 2013) global debt has increased by almost $100 trillion, and compared to 2018, by more than $60 trillion (Global Debt Monitor. Politics and Climate Finance in a High-Debt World. – IIF , 16 November 2023).
In 2021, the global debt, as a result of the crisis caused by the so-called covid pandemic, grew significantly, approaching the level of 300 trillion dollars, but did not manage to overcome it. And now it’s “broken”.
The Institute of International Finance is a non-governmental organization. The IIF was established by 38 banks from leading industrialized countries in 1983 in response to the international debt crisis of the early 1980s.
For four decades, the membership of the organization has been constantly expanding, and the IIF now includes more than 400 companies, banks and other organizations from more than 60 countries. The IIF is not the only organization that monitors global debt.
Thus, the International Monetary Fund (IMF) also compiles statistics on global debt, but its estimates are more modest. Thus, at the end of last year, the IMF put the value of global debt at $235 trillion, which is roughly 1/5 lower than the value calculated by the IIF.
However, the difference between the IMF and IIF estimates is largely due to the fact that the Fund does not include the financial sector (banks, insurance companies, etc.) in the total amount of debt. But the IIF takes into account the debts of the financial sector.
It is true that it is not very clear how they are calculated: as gross debts or as net debts (i.e. minus claims on issued loans and loans). According to experts, the IIF data is more complete.
Approximately 2/3 of the world’s debt is in countries with so-called mature markets (MM) or countries that are also called “developed”. So-called emerging market (EM) or “developing” countries account for 1/3 of the world’s debt.
At the end of Q3 2023, the total debt of developed countries stood at $206.0 trillion, up from $194.4 trillion at the end of Q3 2022. The total debt of developing countries equaled accordingly at $101.3 trillion and $94.5 trillion.
For the period 2018-2023 the largest absolute increases in debt in the first group were recorded in countries such as the US, Japan, France and the UK. In the second group of countries, most of the increase in debt was in China, India, Brazil and Mexico.
The dynamics of global debt expressed in relative terms (the amount of debt compared to world GDP) is interesting. At the beginning of the last decade, this figure exceeded the bar of 300% of GDP. By early 2021, the figure had jumped to 362%.
This jump is due not only to sharply increased borrowing, but also to the fact that at the end of 2020 there was a decline in global GDP. After that, a gradual decrease in the relative indicator began. In the 4th quarter of last year, it fell to 334%. Then it stabilized, being at the level of 333-335% for three quarters.
In the group of developing countries, the largest increases in the relative level of debt for the period 2018-2023 were registered in Russia, China, Saudi Arabia and Malaysia. The largest declines in relative debt levels were seen in Chile, Colombia and Ghana.
In the group of developed countries in 2018-2023. Most countries showed a decline in relative debt levels. But there are countries whose relative level of debt burden has increased during this period. These are Malta, Norway, Japan, France, Estonia and Lithuania.
The global panorama of the relative debt burden for individual types of debt is interesting.
Globally, the public debt burden level over the year (from the end of the 3rd quarter of 2022 to the end of the 3rd quarter of 2023) increased from 96.7 to 97.0% of GDP. In the group of developed countries, the burden on this type of debt slightly decreased during the year – from 115.9 to 114.2%. But in the group of developing people it is increasing – from 64.5 to 68.2%.
However, the relative level of government debt in the developed country group is currently 1.67 times higher than in the developing country group.
With this type of debt, the highest level of burden at the end of the 3rd quarter of 2023 was registered in Japan – 239.9% of GDP. In the US, this figure is 117.6%; in the euro area – 92.6%; in Great Britain – 82.5%.
In the group of developing countries, in terms of the relative level of public debt, the record holders (% of GDP) are the following countries: Singapore – 170.8; Hong Kong – 103.4; Ghana – 85.9; Brazil – 84.4; China – 83.0; Egypt – 81.4.
For reference: in Russia, this figure is 23.0%. We can say that this is a record low compared to most developed and developing countries.
The relative level of indebtedness of the household sector slightly decreased during the year – from 63.1 to 61.7% of GDP. For the group of developed countries, the figure drops from 73.3 to 70.7%. But in the group of developing countries it increased slightly – from 46.0 to 46.7%. In the group of developed countries, the debt burden is 1.51 times higher.
Countries with the highest debt burden of the household sector (% of GDP): South Korea – 100.2; Hong Kong – 95.2; Great Britain – 78.5; USA – 73.2. But there are countries with surprisingly low levels of this type of debt (% of GDP): Ghana – 2.7; Argentina – 3.7; Egypt – 8.1; Kenya – 10.7.
All countries with low and very low levels of debt in the household sector are from the group of developing countries. For reference: in Russia this figure is 23.3%.
The relative level of debt of non-financial corporations worldwide decreased during the year from 96.0 to 94.9% of GDP. For the group of developed countries, the figure drops from 92.9 to 88.7%. In the group of developing countries, the debt burden has increased significantly – from 101.4 to 105.2%.
For this type of debt, the burden in developing countries turns out to be higher than in developed countries (in contrast to the first two types of debt – of the government and of the household sector).
The record holders in terms of the debt burden of non-financial enterprises are the following countries (% of GDP): Hong Kong – 267.9; China – 166.9; South Korea – 126.1; Japan – 115.2; Vietnam – 107.0.
As you can see, all the record holders are from the East Asia region. The leading Western countries have the following levels of debt (% of GDP): USA – 76.1; Eurozone countries – 95.5; Great Britain – 65.0.
There are countries in the world with a very low value of the indicator (% of GDP): Nigeria – 9.2; Ghana – 11.8; Argentina – 16.9; Mexico – 21.5; Indonesia – 23.3. For reference: in Russia, this figure is 81.6% of GDP. Moreover, the previous year it was 68.2%. Very significant growth.
Finally, the relative level of financial sector debt decreased globally over a one-year period from 81.5 to 79.5% of GDP. In the group of developed countries, the load decreased from 108.5 to 105.8%.
For the group of developing countries – from 36.2 to 35.5%. It is noteworthy that with this type of debt, the burden in the group of developed countries is three times higher than in the group of developing countries!
The following countries have the highest level of financial sector debt burden (%): Japan – 198.3; Singapore – 168.9; Great Britain – 156.3; Hong Kong – 168.9; Eurozone countries – 106.6. In the USA, the figure is 75.9%, i.e. approximately corresponds to the world average.
In a number of countries, the value of the indicator was even below ten percent (% of GDP): Pakistan – 1.3; Kenya – 2.2; Ghana – 2.4; India – 2.6; Vietnam – 4.5; Indonesia – 6.6; Mexico – 9.4, etc. For reference: in Russia this indicator is 9.8%. That is, also a very low level (although a year earlier it was even lower – 6.8%).
If we sum the debt for all four components above, then the total debt level of individual countries will be as follows (% of GDP): Japan – 618.1; Great Britain – 382.3; South Korea – 362.3; China – 358.9; Eurozone countries – 349.3; USA – 342.8. These are large economies whose relative total debt levels exceed the world average.
There are also countries with very low relative levels of total debt (% of GDP): Nigeria – 70.2; Mexico – 87.0; Peru – 98.8; Ghana – 102.7; Kenya – 103.4; Argentina – 112.7; Egypt – 114.5; Turkey – 116.9, etc. For reference: in Russia, the relative indicator of total debt is 137.7%.
This is also a very low level (however, during the year it increased significantly; at the end of the 3rd quarter of 2023 it was equal to 109.5%).
In the overview of the Institute of International Finance, the figures that reflect the amount of debt service costs by country are also interesting. In terms of budget revenues, public debt service costs are (average value for the period 2017-2019, %): India – 24; Brazil – 13; South Africa – 12.5; USA – 8.5; Malaysia – 8; Italy – 7; Turkey – 5; Great Britain – 4; France – 3.
A forecast of the possible average value of this indicator for the period 2024-2026 is also given. For India it should be almost 30%, for South Africa – almost 25%. In the US and Malaysia, the figure is estimated at 15%, etc.
In absolute terms, the annual budget expenditure for servicing the public debt in the group of developed countries in recent years (as of 2017) amounts to about $2 trillion. developing countries (excluding China) annual national debt servicing costs have risen from about $0.5 trillion in 2009 to almost $1 trillion in 2022-23.
In China in recent years, such costs have already amounted to about $0.3 trillion, and in the world as a whole today the cost of servicing government debts is approaching $2.8 trillion.
From the end of the last century to 2023, inclusive, the share of the private non-financial sector (household sector and non-financial enterprise sector) that is dedicated to debt service varies within 16-18% in the group of developed countries.
For the group of developing countries (excluding China), this share in 1999 was almost 18%; then in 2004-2005 it fell to 9%; then it started to grow, fluctuating in the “corridor” from 10 to 12.5% since 2008. In China, the figure in 1999 was 10.5%, rising to 21.5% by 2023.
Among all major countries, as shown by the above figures, the Japanese economy experiences the greatest debt burden, as shown by other sources.
Translation: SM
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