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Sunday, 17 November 2019

Surging debt levels in emerging markets hit record USD 71.4 tn in 2Q2019 -IIF

Surging debt levels in emerging markets hit record USD 71.4 tn in 2Q2019 -IIF: Total debt owed by emerging market businesses, governments and households reached a record USD 71.4 tn in 2Q2019, amounting to around 220% of EM GDP, according to the Institute of International Finance (IIF). The Global Debt Monitor finds that EM debt has risen by USD 4.6 tn in the year to 2Q2019, having measured USD 66.8 tn in 2Q2018.

Sovereigns driving debt growth in EMs: Rising EM debt levels over the previous decade have been driven in large part by state-owned enterprises, which now account for more than half of all non-financial corporate debt. Bonds now make up 47% of all EM debt, up from 43% a decade ago.

Global debt levels to surpass USD 255 tn this year: The total amount of global debt surged by USD 7.5 tn in the first half of 2019, spurred by a wave of monetary easing by central banks across the world. Current levels are close to breaking a new record of USD 250 tn (or 320% of GDP), and are on track to exceed USD 255 tn by the end of 2019.

Soaring debt to limit fiscal stimulus options: “With diminishing scope for further monetary easing in many parts of the world, countries with high levels of government debt (Italy, Lebanon) — as well as those where government debt is growing rapidly (Argentina, Brazil, South Africa, and Greece) — may find it harder to turn to fiscal stimulus,” the IIF wrote.

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