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- April 1, 2018: Vol. 30, Number 4

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Record global debt gives rise to concern

by Jennifer Molloy

Global debt reached a record $233 trillion in third quarter 2017, increasing approximately $16.5 trillion for the year through September 2017, according to the Institute of International Finance’s Global Debt Monitor. Debt for all segments — households, nonfinancial corporate, government, financial sector — measured by the report increased for mature and emerging markets globally between fourth quarter 2016 and third quarter 2017.

Although certain factors have helped ease the global debt-to-GDP ratio to roughly 318 percent in third quarter 2017 from an all-time high of 321 percent in third quarter 2016 — including synchronized global growth, rising inflation (China, Turkey) and attempts to prevent a destabilizing debt buildup (Canada, China) — the report highlights hidden vulnerabilities:

High debt levels could constrain the pace and scale of monetary policy tightening, as central banks continue to proceed with caution to support growth.

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