By Mark McSherry

Global debt increased by $10 trillion in the first half of 2023 to a new all-time high of $307 trillion, according to the latest Global Debt Monitor from the Washington-based Institute of International Finance (IIF).

The debt is $100 trillion more than it was a decade ago.

“Over 80% of the debt buildup came from mature markets in H1 2023, with the US, Japan, the UK, and France registering the largest increases,” said the monitor report.

“In emerging markets, the rise has been more pronounced in China, India, and Brazil.”

After witnessing declines of seven consecutive quarters, the global debt-to-GDP ratio has resumed its upward trajectory in the first two quarters of this year and is now hovering around 336% — up from 334% in Q4 2022.

“The sudden rise in inflation was the main factor behind the sharp decline in debt ratio over the past two years, allowing many sovereigns and corporates to inflate away their local currency liabilities,” said the report.

“With wage and price pressures moderating (though not expected to return to target levels), we foresee the global debt ratio to surpass 337% by the end of the year …

“The rise in debt ratios this year was more evident among governments and financial institutions.

“In contrast, prevailing macro headwinds, including tighter funding conditions, have led to a marked deceleration in bank credit expansion to households and non-financial businesses.

“Notably, in the US, the continued expansion of private credit markets has offered a buffer for those businesses that have faced more stringent bank lending standards following the US regional banking stress earlier this year.”