To a record $313 trillion: why global debt has grown by almost $100 trillion in ten years

In 2023, the total amount of global debt reached a record high, according to a study by the American Institute of International Finance (IIF).

As the organization’s experts calculated, from January to December, the amount increased by more than $15 trillion and for the first time during the entire period of observation amounted to $313 trillion.

“About 55% of this growth comes from developed markets (primarily the USA, France and Germany).

Among developing countries, most of the debt build-up was concentrated in China, India and Brazil,” the report said.

Let us clarify that the volume of global debt represents the total debt of the population, companies, financial institutions and governments of all countries.

Over the past ten years, the value has grown by almost $100 trillion.

Moreover, the growth of the indicator has accelerated noticeably since 2020, after the start of the coronavirus pandemic.

As Fyodor Sidorov, founder of the School of Practical Investment, told RT, at that moment the widespread introduction of quarantine restrictions and border closures, along with mass layoffs and production suspensions, seriously hit the global economy.

To combat the consequences of COVID-19, many countries had to introduce anti-crisis measures and urgently increase spending.

“For example, in developed countries, governments actively supported citizens by providing them with benefits, which led to an increase in public debt.

Well, the business suffered significant losses.

Moreover, many companies, on their own initiative, continued to pay employees wages, despite the suspension of enterprise operations,” Sidorov added.

In addition, quarantine restrictions led to interruptions in the supply of goods and prices for many types of products in the world began to rise sharply.

At the same time, the authorities of a number of states began to actively print money and pump it into their own economies to stimulate their growth, which further accelerated inflation.

The situation worsened in 2022, when, after the West imposed unprecedented sanctions against Russia, energy resources became more expensive on the global market.

Then, in an attempt to curb price increases, many countries, primarily developed ones, had to raise central bank interest rates for the first time in a long time.

As a result, servicing debts has become more expensive, Alexander Razuvaev, a member of the supervisory board of the Guild of Financial Analysts and Risk Managers, told RT.

“Keeping rates high makes new loans and their servicing very expensive.

This applies to companies, the population, and governments.

Therefore, the global debt itself is growing at a very rapid pace.

Businesses and governments are now refinancing debt, anticipating that rates will begin to fall this year.

If this happens, then even with such large debts, in principle, you can exist for quite a long time.

If rates continue to be high, this could bring serious problems to the global economy,” Razuvaev explained.

According to IIF estimates, the $313 trillion in debt achieved by the end of 2023 is equivalent to 331% of global GDP.

Thus, all nations now have debt that is more than three times the size of the global economy.

The highest such figure was recorded in Japan - almost 604% of GDP.

In addition, significant debt burdens were noted in the UK (372%), China (360%), South Korea (350%), the Eurozone (349%), and the USA (342%).

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“In principle, Japan is able to service its debts, just like the US, Europe or China.

These are countries with a developed type of economy, and they understand very well what they are doing when they borrow money and increase the amount of debt.

This ultimately allows economic systems to move forward,” said BitRiver financial analyst Vladislav Antonov in a conversation with RT.

Fedor Sidorov shares a similar point of view.

According to him, in those states where the total debt is several times greater than the size of the economy, the likelihood of “total bankruptcy” remains quite low.

At the same time, such financial indicators force the authorities of these countries to constantly adopt complex balanced budget programs in order “not to slide into a recession or to avoid a new acceleration of inflation,” the analyst said.

On your own

Let us note that in Russia at the end of last year, the total debt, according to the IIF, increased from 121 to 136% of GDP.

However, the figure still remains significantly lower than in most other countries.

Moreover, the Russian government's debt now amounts to only 21% of GDP.

This is today the lowest figure among all countries in the IIF rankings.

“Russia adheres to the policy of a shot sparrow: having in the past the sad experience of the 1998 default, the state is trying to avoid unnecessary build-up of debt.

In general, the country now looks quite stable compared to its Western counterparts, and current debt levels reduce the likelihood of possible negative consequences,” said Fedor Sidorov.

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A similar opinion was expressed by leading Freedom Finance Global analyst Natalya Milchakova in a commentary to RT.

According to her, the authorities have learned lessons from the events of 1998 and are now trying to keep budget spending under strict control even against the backdrop of the current increase in spending on defense and government orders.

“Since the Russian budget has long been formed at the expense of oil and gas revenues, and energy markets go through certain cycles of rising and falling prices, the Russian authorities control expenses strictly enough to prevent a huge budget deficit and increased borrowing during a price downturn.

That is why we have a National Welfare Fund, which receives all excess oil revenues, so that in times of crisis we can finance large production facilities of strategic importance if budget revenues are insufficient,” noted RT’s interlocutor.

In addition, according to her, the possibilities of external borrowing from Russia are now limited.

At the same time, the country began to increase the volume of non-resource exports, including its own technologies, which makes it possible to attract additional funds to the budget and not increase public debt, Milchakova emphasized.