How much is the earth in debt

February 17, 2021, 4:03 PM UTC

The world has never been more indebted after a year of battling Covid-19. And there’s even more borrowing ahead.

Governments, companies and households raised $24 trillion last year to offset the pandemic’s economic toll, bringing the global debt total to an all-time high of $281 trillion by the end of 2020, or more than 355% of global GDP, according to the Institute of International Finance. They may have little choice but to keep borrowing in 2021, said Washington-based director of sustainability research Emre Tiftik and economist Khadija Mahmood.

The clock is ticking. Every second, it seems, someone in the world takes on more debt. The idea of a debt clock for an individual nation is familiar to anyone who has been to Times Square in New York, where the American public shortfall is revealed. Our clock (updated September 2012) shows the global figure for almost all government debts in dollar terms.

Does it matter? After all, world governments owe the money to their own citizens, not to the Martians. But the rising total is important for two reasons. First, when debt rises faster than economic output (as it has been doing in recent years), higher government debt implies more state interference in the economy and higher taxes in the future. Second, debt must be rolled over at regular intervals. This creates a recurring popularity test for individual governments, rather as reality TV show contestants face a public phone vote every week. Fail that vote, as various euro-zone governments have done, and the country (and its neighbours) can be plunged into crisis.

Notes:

This interactive graphic displays gross government debt for the globe. The clock covers 99% of the world based upon GDP. It uses latest available data and assumes that the fiscal year ends in December.
Debt figures are derived from national definitions and therefore may vary from country to country.
The clock shows the estimated debt at the point corresponding to the current date and time in whatever year you are viewing; this is why it increases even when you view past or future years.
All data is mapped on modern borders (Montenegro split from Serbia in 2006, Kosovo in 2008. South Sudan split from Sudan in 2011. Data for these countries are included in their parent nations' prior to these dates).

LONDON, Sept 14 (Reuters) - Global debt rose to a new record high of nearly $300 trillion in the second quarter, but the debt-to-GDP ratio declined for the first time since the start of the pandemic as economic growth rebounded, the Institute of International Finance (IIF) said on Tuesday.

Total debt levels, which include government, household and corporate and bank debt, rose $4.8 trillion to $296 trillion at the end of June, after a slight decline in the first quarter, to stand $36 trillion above pre-pandemic levels.

"If the borrowing continues at this pace, we expect global debt to exceed $300 trillion," said Emre Tiftik, IIF's director of sustainability research.

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The rise in debt levels was the sharpest among emerging markets, with total debt rising $3.5 trillion in the second quarter from the preceding three months to reach almost $92 trillion.

Global debt fast approaching $300 trillion

In a positive sign for the debt outlook, the IIF reported a decline in the global debt-to-GDP ratio for the first time since the outbreak of the coronavirus crisis.

Debt as a share of gross domestic product fell to around 353% in the second quarter, from a record high of 362% in the first three months of this year.

The IIF said that of the 61 countries it monitored, 51 recorded a decline in debt-to-GDP levels, mostly on the back of a strong rebound in economic activity.

But it added that in many cases the recovery had not been strong enough to push debt ratios back below pre-pandemic levels.

According to the IIF, total debt-to-GDP ratios excluding the financial sector are below pre-pandemic levels in just five countries: Mexico, Argentina, Denmark, Ireland, and Lebanon.

China has seen a steeper rise in its debt levels compared with other countries, while emerging-market debt excluding China rose to a fresh record high at $36 trillion in the second quarter, driven by a rise in government borrowing.

The IIF noted that after a slight decline in the first quarter, debt among developed economies -- especially the euro area -- rose again in the second quarter.

In the United states, debt accumulation of around $490 billion was the slowest since the start of the pandemic, although household debt increased at a record pace.

Globally, household debt rose by $1.5 trillion in the first six months of this year to $55 trillion. The IIF noted that almost a third of the countries in its study saw an increase in household debt in the first half.

"The rise in household debt has been in line with rising house prices in almost every major economy in the world," said the IIF's Tiftik.

Total sustainable debt issuance meanwhile has surpassed $800 billion year to date, the IIF said, with global issuance projected to reach $1.2 trillion in 2021.