Global debt rose by $1.3 trillion to a new record high of $315 trillion — 333% of global GDP — in the first quarter of 2024, according to the latest Global Debt Monitor from the Washington-based Institute of International Finance (IIF).
Further, after three consecutive quarters of decline, the global debt-to-GDP resumed its upward trajectory in Q1 of 2024.
In mature markets, debt rose most quickly in the United States and Japan.
Emerging market debt topped $105 trillion in Q1 2024, with the largest increases coming from China, India, and Mexico.
“This increase marks the second consecutive quarterly rise and was primarily driven by emerging markets, where debt surged to an unprecedented high of over $105 trillion—$55 trillion more than a decade ago,” said the IIF.
“The bulk of the EM debt buildup came from China, India, and Mexico in Q1 2024. Conversely, Korea, Thailand, and Brazil saw the most significant declines in the USD value of their total debt.
“Total debt levels in mature markets remained broadly stable in Q1, as a reduction in debt by households and non-financial corporations offset the continued rise in government and financial sector indebtedness.
“The overall increase was primarily concentrated in the U.S. and Japan, followed by Ireland and Canada while the most significant declines were observed in Switzerland and Germany.”
The IIF added: “Japan stands out as one of the world’s most heavily indebted countries, with total debt hovering over 600% of GDP— a staggering increase of over 60%pts vs. pre-COVID-19 levels.
“This surge in Japanese debt was the largest across major mature markets during this period. The general government accounts for the largest portion of Japan’s indebtedness.
“However, since the onset of the pandemic, debt buildup has been more pronounced in the financial sector. The rise in government debt was relatively modest, at around 4%pts, compared to a 17%pt increase in the U.S. government debt and 25%pt surge in China’s government debt.
“Given that Japan’s financial institutions and the general government hold substantial amounts of foreign assets, the sharp depreciation of the Japanese yen against the currencies of its major trading partners should support Japan’s sovereign and corporate debt dynamics.
“Notably, Japan’s significant holdings of interest-bearing government assets held abroad, coupled with relatively low borrowing costs, have played a crucial role in keeping government net interest expense relatively low in recent years.
“However, a weaker yen could place additional pressure on household balance sheets by diminishing their purchasing power and could adversely impact household debt dynamics over the medium term.”