Global debt could soar to $360 trillion by 2030 – IIF

Global debt could exceed $360 trillion by 2030 — over $85 trillion higher than current levels — according to the latest Global Debt Monitor from the Washington-based Institute of International Finance (IIF).

The IIF said there is “significant uncertainty” about how the global economy can “deleverage in the future without significant adverse implications for economic activity.”

The IIF said that spurred by a sharp rise in government and corporate borrowing as the COVID-19 pandemic wears on, the global debt load increased by $15 trillion in the first three quarters of 2020 and now stands above $272 trillion.

It said that with little sign of a slowdown in debt issuance, it estimates that global debt will smash through records to hit $277 trillion by the end of this year.

The IIF is the global association of the global financial industry, with more than 450 members from more than 70 countries. IIF members include commercial and investment banks, asset managers, insurance companies, sovereign wealth funds, hedge funds, central banks and development banks.

Looking beyond 2020, the Washington-based IIF said: “The pace of global debt accumulation has been unprecedented since 2016, increasing by over $52 trillion.

“While some $15 trillion of this surge has been recorded in 2020 amid the COVID-19 pandemic, the debt build-up over the past four years has far outstripped the $6 trillion rise over the previous four years and over earlier comparable periods.

“As a result, there is significant uncertainty about how the global economy can deleverage in the future without significant adverse implications for economic activity.

“The next decade could bring a reflationary fiscal response, in sharp contrast to the austerity bias in the 2010s.

“If the global debt pile continues to grow at the average pace of the last 15 years, our back-of-the-envelope estimates suggest that global debt could exceed $360 trillion by 2030—over $85 trillion higher than current levels.”