Total debt decreased by about US$5.5 trillion to US$300 trillion in the second quarter
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Bloomberg News
Sydney Maki
U.S. one dollar banknotes. Photo by Dado Ruvic/Reuters illustration The global mountain of debt in U.S. dollar terms shrunk for the first time since 2018 as the greenback surged and major central banks boosted borrowing costs, according to the Institute of International Finance.
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Total debt decreased by about US$5.5 trillion to US$300 trillion in the second quarter, IIF data showed. While most of that drop occurred in developed economies, the U.S. and Canada ended up seeing an uptick in debt levels. The decline was more limited in emerging markets, where the ratio of debt to gross domestic product climbed.
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“While much of this is a valuation effect, a rapid slowdown in debt issuance has also contributed,” Emre Tiftik, director of sustainability research and his colleagues at IIF, wrote in a note Wednesday. “The rapid rise in borrowing costs and weak investor appetite have kept many issuers away from primary markets this year.”
Still, the world’s debt-to-GDP ratio rose slightly to 350 per cent, a trend that IIF expects to continue at least through the end of the year amid inflation, growth concerns and tighter monetary policy.
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The greenback has risen this year against all of its Group-of-10 currency peers, with the Bloomberg Dollar Spot Index up more than 11 per cent in 2022 — on track for its best annual performance on record.
Bloomberg.com