Global debt hits a new high, experts remind policy not to "turn sharply"

(Financial World) Global Debt Sets New High, Experts Remind Policy Not to "Take a Sharp Turn"

　　China News Service, Beijing, February 18 (Liu Liang) The new crown pneumonia epidemic has once again increased the global debt pressure.

The latest monitoring results of the International Finance Association (IIF) show that affected by the epidemic, the global debt increased by 24 trillion U.S. dollars last year, reaching a record of 281 trillion U.S. dollars.

At the same time, the ratio of global debt to GDP exceeds 355%.

　　IIF pointed out that in this debt increase, the surge in government debt is the main "fuse", which accounts for more than half of the increase in debt.

In the case of high government debt, the proportion of government debt to GDP has risen from 88% in 2019 to 105%.

　　In terms of different markets, the debt of developed economies is significantly higher than that of emerging market economies.

IIF data shows that the debt of advanced economies has surged from US$183 trillion in 2019 to nearly US$205 trillion.

Geographically, the rise in debt in Europe is particularly pronounced, with the ratio of non-financial sector debt to GDP in France, Spain and Greece rising by about 50%.

　　As vaccination is gradually being carried out around the world, the IIF believes that this year's global debt growth momentum may be relatively moderate.

However, due to differences in vaccination progress in various countries, the IIF expects that the party who receives the vaccine later will also face a greater debt burden.

　　IIF expects that the government with a huge budget deficit will add another 10 trillion US dollars in debt this year, and the debt burden will exceed 92 trillion US dollars by the end of 2021.

　　"Political and social pressures may limit the government's efforts to reduce deficits and debts, jeopardizing their ability to respond to crises in the future." The IIF also pointed out that continued reliance on government support may also lead to "systemic risks" because it encourages the so-called "Zombie" companies (the weakest and most indebted companies) take on more debt.

　　However, IIF economist Emre Tiftik also emphasized in an online seminar this week that withdrawing from supportive government measures prematurely may mean a surge in bankruptcies and trigger a new wave of non-performing loans, which will affect the financial stability of the banking industry. influences.

　　As the economies of various countries slowly recover, he believes that governments need to find a well-designed policy "exit" strategy. How to gradually achieve a balance between reducing economic stimulus policy support and controlling debt growth will be particularly critical.

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