The COVID-19 pandemic has added $24 trillion to the global debt mountain over the last year, a new study has shown, leaving it at a record $281 trillion and the worldwide debt-to-gross domestic product ratio at over 355%.
The Institute of International Finance (IIF)’s global debt monitor estimated government support programs had accounted for half of the rise, while global firms, banks, and households added $5.4 trillion, $3.9 trillion, and $2.6 trillion, respectively.
It has meant that debt as a ratio of world economic output known as gross domestic product surged by 35 percentage points to over 355% of GDP.
That upswing is well beyond the rise seen during the global financial crisis, when 2008 and 2009 saw 10 percentage points and 15 percentage points respective debt-to-GDP jumps.
There is also little sign of a near-term stabilization.
Borrowing levels are expected to run well above pre-COVID-19 levels in many countries and sectors again this year, supported by still low interest rates, although a reopening of economies should help on the GDP side of the equation.
“We expect global government debt to increase by another $10 trillion this year and surpass $92 trillion,” the IIF report said, adding that winding down support could also prove even more challenging than it was after the financial crisis.
