The global debt mountain continues to be a growing concern for experts. Amid the coronavirus pandemic, public debt is soaring across the world. However, the worst part is that the prospects are very gloomy.
The reality is that there is no sign of a near-term stabilization. The US Institute of International Finance (IIF) estimates that total global debt will exceed $300 trillion by mid-2022 for the first time in history.
"The global debt-to-GDP ratio surged by 35 percentage points to over 355% of GDP in 2020, well beyond the upswing seen during the 2008 global financial crisis," IIF experts said.
The lion's share of the upswing accounted for government debt. Over the past year, government borrowing increased by $12 trillion, causing the amount of debt to rocket to $82 trillion, or 105% of the global GDP. According to the IIF, this figure may rise to $92 trillion in 2021. The problem is that debt-servicing costs in this case are a very daunting task for countries. Thus, the world economy will definitely suffer. It may become more susceptible to possible future crises.
