The Next Crisis: Global Debt Now Totals $246.5T After Unprecedented Borrowing Binge
Global debt rose by an unprecedented $3 trillion in the first three months of this year to a total $246.5 trillion, according to industry research and advocacy organization the Institute of International Finance.
The worldwide debt buildup, which is now nearly 320 percent more than the world gross domestic product, has reached crisis level with most countries expected to fall into a debt trap and unable to pay their obligations, according to Washington Post columnist Robert Samuelson.
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“What further confuses the situation is that different countries have different experiences and different tolerances for debt,” Samuelson said in an opinion piece.
“So far, low interest rates have helped sustain the global economy. But there are limits to how much this can continue,” he added.
Interest rates in the U.S. and across other major economies are already too low or in the negative, suggesting that they may start to rise sooner or later, according to CNBC.
Data from the Institute of International Finance indicated that the U.S. and China led in terms of debt increases in the first quarter of this year. China has already reported the slowest growth in 27 years.
While no one clearly knows how much debt the world can take on, the anticipation that countries could take on more debt to jump-start their economies in the event of a global slowdown could push global debt levels over the red line.
The debt increase in quarter one of 2019 is already more than what was borrowed in the whole of 2018, signaling an increased debt appetite.