Global debt has risen by $24 trillion in the last year, driven higher largely by the response to the Covid-19 pandemic, the Institute of International Finance announced Wednesday.
With global debt now totaling a record $281 trillion, the ratio of debt to global GDP has risen 35 points to 355%, according to the group’s calculations. The increase in debt load is larger than the jump seen during the Great Recession.
Government spending accounts for about half of the increase. Corporations added $5.4 trillion to the total, while banks added $3.9 trillion and households added $2.6 trillion.
The debt bonanza is expected to continue. “We expect global government debt to increase by another $10 trillion this year and surpass $92 trillion,” the IIF said, while warning that it could be difficult to cut back: “Political and social pressure could limit governments’ efforts to reduce deficits and debt, jeopardizing their ability to cope with future crises. This could also constrain policy responses to mitigate the adverse impacts of climate change and natural capital loss.”