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The Institute of International Finance (IIF) says global debt will soar to a record $277 trillion by the end of 2020 as governments and companies continue to spend in response to the COVID-19 pandemic. Already, the debt has ballooned by $15 trillion this year to $272 trillion through September. Governments from developed markets account for more than half of that increase, according to the IIF\u2019s Global Debt Monitor.<\/strong><\/p>\n According to a report<\/a>, debt repayments will prove to be \u201cmuch more onerous\u201d despite the \u201crecord-low borrowing costs across the globe.\u201d Declining revenues to emerging market governments will be partly to blame. IIF data shows that emerging market debt-to-GDP hit nearly 250% in the third quarter.<\/p>\n For China, the debt-to-GDP ratio reached 335% in the just-ended quarter, while the entire 2020 ratio is expected to peak at around 365% of global GDP.<\/p>\n On the other hand, developed markets\u2019 overall debt jumped to 432% of GDP in the third quarter, from a ratio of about 380% at the end of 2019. Indications are that this will go up further in Q4.<\/p>\n Meanwhile, the IIF data shows that the US, which has borrowed heavily in the year, will see its debt hitting $80 trillion in 2020 up from $71 trillion in 2019. Similarly, in the Euro area, the \u201cdebt rose by $1.5 trillion to $53 trillion through September.\u201d<\/p>\n While the current debt-to-GDP ratios are worrisome, the IIF report speculates on the potential ramifications if countries suddenly decide to deleverage. The report says:<\/p>\n \u201cThere is significant uncertainty about how the global economy can deleverage in the future without significant adverse implications for economic activity.\u201d<\/p>\n Still, the disproportionately high debt levels will have a negative impact on the global economy in the long term. Pressed countries might be forced to create money to pay off debts while others will default on their obligations.<\/p>\n Recently, Zambia became the sixth developing country to default<\/a> after the Covid-19 induced revenue drop affected the Southern African nation\u2019s ability to meets its obligation.<\/p>\n What are your thoughts on the growing global debt? Tell us what you think in the comments section below.<\/strong><\/em><\/p>\n The post Report: Pandemic Response Pushed Global Debt to $272 Trillion in Q3, $5T in Borrowing Expected in Q4<\/a> appeared first on Bitcoin News<\/a>.<\/p>\nGovernments from Developed Markets Are the Biggest Borrowers<\/h2>\n
Risks of Deleveraging<\/h2>\n