Cause of next crisis: Global debt peaks

According to the “Global Debt Monitor” report of the Institute of International Finance (IIF), the amount of global debt increased by more than 10 trillion dollars compared to 2020 and reached 303 trillion dollars as of the end of last year.

Global debt amounted to $292.6 trillion in 2020, an increase of $33 trillion due to the impact of the COVID-19 pandemic.

With the increase in global debt last year, The increase in the debts of emerging markets, especially in China it was effective. On the sectoral basis, the biggest increase was seen in debts belonging to public and non-financial companies.

Growth in the ratio of global debt to GDP decline with inflation

The economic recovery and higher inflation helped stabilize debt levels, while the ratio of global debt to countries’ total GDP fell to 35.1 percent last year.

The ratio of global debt to countries’ GDP reached an all-time high by over 360 percent in 2020.

occurred in this period Despite the decline, the ratio of global debt to GDP remained 28 points above the pre-COVID-19 pandemic period.

Looking at the distribution of debt, household debt was $56.9 trillion by the end of 2021, debt belonging to non-financial companies was $88.8 trillion, public debt was $88.1 trillion, and debt belonging to financial companies such as banks was $69.8 trillion.

When their ratio to total GDP is taken into account, household debts decreased from 66.4 percent to 64.8 percent and debts belonging to non-financial companies decreased from 101.6 percent to 98.4 percent last year. In the same period, public debts decreased from 106.6 percent to 104.7 percent and debts belonging to financial companies decreased from 85.8 percent to 83 percent.

China’s debt rises to $60 trillion

While the total debt of developed economies was $207.8 trillion in 2021, the total debt of emerging economies such as India, China, South Africa, Brazil and Turkey stood at $95.7 trillion.

China’s debt rose sharply during this period, while the country’s debt rose by $7 trillion last year to $60 trillion.

In Turkey, when the ratios of debts to GDP are taken into account, household debts decreased by 1.8 percentage points to 16.2 percent in the last quarter of last year compared to the same quarter of the previous year, while debts belonging to non-financial companies increased by 1.3 percentage points. 73 and public debts increased by 1.1 points to 43.4 percent. Debts of financial companies such as banks in Turkey increased by 6 percentage points to 34 percent in this period.

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