A new report (💾) by the Institute of International Finance just dropped some big stats on global debt (i.e., total debt owed by all households, companies, and governments). It says debt:
- 📈 has spiked by $10T just in the first half of this year
- 🔺 increased by $100T just in the past decade, and
- ☝️ is now at a new all-time high of $307T.
Those are some huge numbers, so it’s worth breaking them down a little: 80% of this year’s new borrowing has been in wealthier economies, where governments are spending more on priorities like the energy transition.
But domestic government debt is at “alarming levels“ in poorer markets, where governments are spending more to cover interest on existing loans, and to pay for popular but expensive policies like fuel subsidies.
Intrigue’s take: Debt has been around forever; in the Louvre Museum, you can see a 4000-year-old text telling Babylonian lenders they can’t just barge into private homes and seize barley to recoup a loan.
But the reality is, our understanding of debt is constantly evolving. Credit is the fuel that helps societies strive, advance, and grow. But when imbalances emerge, you run the risk of sudden crises emerging.
And that’s probably the central message we take from this latest report.
Also worth noting:
- The World Bank has estimated that 60% or more of low-income countries are “at high risk of debt distress.”