Global debt hits new record of $253 trillion and is set to grow even more this year

The world’s debt when compared against its total output hit another all-time high of over 322% in the third quarter of 2019 and it is set to keep growing, the Institute of International Finance (IIF) said in a new research report. Total worldwide debt sat close to a record $253 trillion by the end of September, boosted mainly by higher borrowing by governments and non-financial corporates. This represented an increase from $250.9 trillion at the end of the second quarter of 2019.

Record-low interest rates in countries around the globe have made it easier and more attractive for corporates, individuals and governments to borrow, and thus incur more debt. But the higher borrowing levels are, the higher the risk of a default for individuals, companies and governments in any possible stressed economic environment.

In terms of government debt, the United States and Australia hit all-time highs in the third quarter of 2019, the IIF said. The institute also noted that debt growth picked up again in China — marking a U-turn from previous periods. China’s household and general government debt are now at all-time highs of 55% of its GDP (gross domestic product), according to the IIF. Overall Chinese debt is close to 310% of GDP — one of the highest in emerging markets, the report said.