Global debt in 2020 reached more than $280 trillion to record new high, Institute of International Finance (IIF) said in report.
IIF attributed this to the increase in government spending to fight the Coronavirus repercussions.
High government debt
The Institute said the debts of households, governments, non-profit institutions and the financial sector increased by about $24 trillion. The total world debt reached $281 trillion by the end of 2020.
According to Global Debt Monitor, the world debt now represents 355% of the world’s GDP, up from 35% in 2019.
Global debt 2020
Earlier in 2020, IIF report predicted world debt to reach $277 trillion at the end of the year. The report predicted a sharp increase in public and corporate debt following COVID-19 pandemic outbreak, to reach 365% of global GDP.
IIF said government debt rose to 105% of GDP in 2020, compared to 88% during 2019. This came as developed countries borrowed $10.7 trillion to contain the crisis.
The Washington-based IIF indicated that world government debt is expected to rise to another $10 trillion this year.
IIF pointed to the possibility of an increase in the accumulated debts, due to the large difference in the degrees of the frequency of vaccination from one country to another. There could be a delay in recovery due to the difficulty of distributing the vaccine.
The Institute of Finance report also showed that private sector debt (non-financial) rose to 165% of GDP in 2020, compared to 124% in 2019.
The report said the total debt at the end of the third quarter of 2020 reached 364% of the global GDP.
It is worth noting that the global debt-to-GDP ratio increased by about 10% during the financial crisis in 2008 and to 15% in 2009. This means world debt in during the Coronavirus pandemic crisis increased to more than the financial crisis.
The world debt, which the institute monitors in a periodic report under the title of the Global Debt Monitor, includes both the debts of governments and financial and non-financial companies as well as household debts.