The world is drowning in debt

Another major global debt has broken all records since late 2019 when it comes to the share of debt in gross domestic product. In fact, global debt, consisting of loans from households, governments and companies, increased by nine trillion dollars to nearly 253 trillion dollars in the first nine months of last year, according to the International Finance Institute. Thus, the share of global debt in world GDP grew 322 percent, surpassing the record of 2016, transmits KosovaPress. More than half of this large sum was accrued from developed markets, such as the United States and Europe, where the debt-to-GDP ratio reached 383 percent. In New Zealand, Switzerland and Norway, there has been an increase in household debt, while the share of government debt in GDP, in the US and Australia, is the highest ever recorded in both countries. Debts in developing countries are smaller, totaling $ 72 trillion, but growing faster in recent years, according to data from the International Finance Institute. China's debt-to-GDP ratio is close to 310 percent, the highest rate in developing countries. Investors have long been skeptical of debt markets, and following the initiative to invest rapidly in Chinese companies around the world, debt rose in 2017 and 2018. Such huge global debt is a real threat to the global economy, especially in light of expectations for it to grow further this year. "Driven by low interest rates and calm financial conditions, we estimate that global debt will exceed $ 257 trillion in the first quarter of 2020," the Institute said in a report. The US Federal Reserve has cut the benchmark rate three times, the European Central Bank still keeping it at a post-crisis level. Despite favorable borrowing conditions, the risk of refinancing is high. A total of $ 19 trillion in loans and bonds will be cut this year, and it is unlikely that all those installments will be paid off or refinanced. The institute's report also highlights another important issue - the need for urgent action to combat climate change. UN estimates are clear - $ 42 trillion in infrastructure is needed for sustainable development, but countries with lending disabilities may face insurmountable hurdles to meet funding requirements for further development, according to International Institute of Finance.