Global Debt Smashes Records Again, Nearing $253T & 322% Of GDP In Q3 2019

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  • The global debt-to-GDP ratio hit a new all-time high of over 322% in Q3 2019, with total debt reaching close to $253 trillion: EM debt exceeded $72 trillion (223% of GDP) while debt in mature markets topped $180 trillion (383% of GDP) in Q3 2019.
  • With debt sustainability squarely in focus, financing for urgent environmental concerns—and for the Sustainable Development Goals more broadly—will be hard to come by, particularly for some emerging and frontier economies.
  • Case in point: nearly half of the cross-border flows related to China’s Belt and Road Initiative are directed to regions that are exposed to a significant level of climate change risk. A number of these countries also have high and rising debt levels.
  • We have added Ukraine to our debt currency breakdown database and launched a new tracker for the debt of state-owned enterprises (SOEs) across key EMs including BRICS, Indonesia, Malaysia, and Turkey.
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Global debt hit all-time high of nearly $253 trillion in Q3 2019: Total debt across the household, government, financial and non-financial corporate sectors surged by some $9 trillion in the first three quarters of 2019 (Table 1). By sector, general government (+$3.5 trillion) and non-financial corporates (+$3 trillion) saw the biggest increases, helping bring the overall global debt-to-GDP ratio to a fresh high of over 322%.

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Global Debt Smashes Records Again, Nearing 3T & 322% Of GDP In Q3 2019

Debt looks set to grow faster in 2020: Spurred by low-interest rates and loose financial conditions, we estimate that total global debt will exceed $257 trillion in Q1 2020, driven mainly by non-financial sector debt (now approaching $200 trillion).

Diminishing returns on new debt: Preliminary data for full-year 2019 suggest that the global debt-to-GDP ratio grew at its fastest pace since 2016—even as global growth fell to its slowest pace since the 2008-2009 financial crisis.

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All sectors loading up: Household debt-to-GDP reached a record high in Belgium, Finland, France, Lebanon, New Zealand, Nigeria, Norway, Sweden and Switzerland. Non-financial corporate debt to GDP topped in Canada, France, Singapore, Sweden, Switzerland and the U.S. (Table 2). Government debt-to-GDP hit an all-time high in Australia and the U.S.

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EM debt has risen more than twofold since 2010, to $72 trillion: The surge has been driven mainly by the sharp buildup in non-financial corporate debt (up to $20 trillion to over $31 trillion). This is a contrast to mature markets, where the government sector has been the biggest driver. The ex-financial sector, the total EM debt-to-GDP ratio reached an all-time high of 187%, ranging from 53% in Nigeria to over 365% in Hong Kong. FX debt in EMs soared to $8.3 trillion in Q3 2019—$4 trillion higher than a decade ago. Dollar debt accounts for over 85% of this increase.

Global Debt Smashes Records Again, Nearing 3T & 322% Of GDP In Q3 2019

China’s debt is fast approaching 310% of GDP—one of the highest in emerging markets: Following a marked slowdown in 2017/18 during the big push for deleveraging, debt accumulation in China picked up again in 2019, notably in the non-financial corporate sector. Government debt grew at its fastest annual pace since 2009. Household debt and
general government debt is now at all-time highs of 55% of GDP.

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