Total frontier market (FM) debt surged by over $160 billion in 2024, reaching nearly $3.8 trillion the fastest accumulation since 2021. Government borrowing led the increase, with Pakistan, Kenya and Romania seeing the largest buildup.
Total debt in frontier markets increased by over $45 billion in H1 2024, reaching a new record high of $3.7 trillion. At 102% of GDP, total debt in frontier markets stands more than 7 percentage points above pre-COVID levels.
The global debt stockpile rose by over $2 trillion in H1 2024, driven by China and the U.S. The EM debt-to-GDP ratio has now reached a record 245% over 25 percentage points higher than pre-pandemic levels.
Global debt rose by some $1.3 trillion to a new record high of $315 trillion in Q1 2024. Moreover, after three consecutive quarters of decline, the global debt-to-GDP resumed its upward trajectory in Q1 2024.
In 2023, frontier market (FM) accumulated some $20 billion of new debt, bringing the total to $3.5 trillion. For the first time since 2020, the FM debt-to-GDP ratio increased, as growth and inflation subsided.
Over $15 trillion was added to the global debt mountain last year, bringing the total to a new record high of $313 trillion. The global debt-to-GDP ratio declined for a third consecutive year, largely driven by mature markets.
Global debt reached a staggering $307 trillion in Q3 2023, with a big increase across the board in both mature markets (U.S., Japan, France, and the UK) and emerging markets (China, India, Brazil, and Mexico).
After reaching an all-time high of $3.5 trillion in Q1 2023, total debt in frontier markets (FM) saw a slight decline in Q2 2023.
Sovereign debt vulnerabilities in emerging markets and developing economies already worrying are expected to intensify in the face of higher borrowing costs.
In a higher-rate environment, the global debt stock rose by $10 trillion to a new record high of $307 trillion in H1 2023.
The global debt stock grew by $8.3 trillion to a near-record $305 trillion in Q1 2023; the combination of high debt levels and rising interest rates has pushed up debt service costs, prompting concerns about the use of leverage in the financial system.
Some $120 billion was added to the debt pile of frontier markets in 2022, bringing it to an all-time high of $3.6 trillion.
The nominal USD value of global debt declined by some $4 trillion to slightly below $300 trillion in 2022. Helped by stronger growth and inflation, global debt/GDP fell again in 2022 but is still above pre-pandemic levels.
The external debt burden of many emerging markets surged in 2022 as EM currencies fell against the USD. Given the high risk of cyclical depreciation and ensuing currency mismatch, sovereign debtors raising foreign currency funds should consider appropriate hedging or other risk mitigation tools.
The growing links between financial leverage and non-financial risks (e.g. climate) are complex and will require new data tools and metrics to monitor and address.
As borrowing slowed, frontier market debt dipped to $3.5 trillion in Q2 2022 still $480 billion above pre-pandemic levels. Helped by economic recovery in an inflationary environment, the FM debt-to-GDP ratio edged down to 103% in Q2 2022.
In light of the 2022 Annual Meetings of the International Monetary Fund and World Bank Group, this letter sets out private sector perspectives on growing challenges to debt sustainability and efforts to enhance the international sovereign debt architecture.
This week, Clay is joined by IIF President and CEO Tim Adams as they discuss a variety of issues surrounding global policy.
Following four quarters of consecutive decline, the global debt-to-GDP ratio is edging back up, approaching 350% of GDP in Q2 2022. We expect the global debt ratio to reach 352% of GDP by end-2022.
Total global debt rose by $3.3 trillion in Q1 2022 to a new record of over $305 trillion-mostly due to China and the U.S.
Total debt in frontier markets surged to a new record high of $3.5 trillion in 2021-some $500 billion above pre-pandemic levels. However, after reaching an all-time high in 2020, FM debt declined to 108% of GDP in 2021-helped by recovery and inflation.
Some $10 trillion was added to the global debt mountain last year, bringing the total to a new record high of $303 trillion.
After reaching an all-time high in Q2 2021, global debt declined slightly to $296 trillion in Q3–but all in mature markets. Global debt-to-GDP ratios continue to decline, helped by stronger economic activity and higher inflation.
Economic recovery remains uneven and patchy for low and lower-middle income countries (LLMICs); Despite easing external debt strains, more than half of LLMICs are at high risk of or already in debt distress; Little information to date on how the G20 Common Framework is being implemented; Greater debt transparency could galvanize ESG investments in emerging and developing economies a key COP26 theme.
Some $4.8 trillion was added to the global debt mountain in Q2 2021, bringing it to an all-time high of $296 trillion. Better news: the global debt/GDP ratio declined significantly in Q2 2021, though this follows a large spike in 2020.
Good investor relations practices call for better debt transparency that supports regular, meaningful debtor-creditor dialogue; Limited access to timely, accurate and clear data can hinder capital flows to developing countries, while improvements in debt transparency are associated with lower borrowing costs and higher sovereign credit ratings; In cases of default, fair debt restructuring requires active information-sharing between debtor and creditors.
High and rising sovereign debt levels have greatly increased the likelihood of further debt strains; Better sovereign debt crisis prevention and resolution is needed to reflect fundamental market changes in recent years; We believe that efforts to strengthen existing mechanisms should center on improving debt transparency, regular and meaningful private-public sector dialogue, and integrating ESG/SDG considerations-all will help borrowers’ market access.
Transparency around sovereign debt obligations remains limited, particularly for emerging and developing economies; International financial institutions could help by making more granular debt data available to the public; Greater clarity around the process, terms and conditions of sovereign debt restructuring would also support debt transparency.
Global debt across all sectors rose by over $10 trillion in 2019, topping $255 trillion. At over 322% of GDP, global debt is now 40 percentage points ($87 trillion) higher than at the onset of the 2008 financial crisis-a sobering realization as governments worldwide gear up to fight the COVID-19 pandemic.
The global debt-to-GDP ratio hit a new all-time high of over 322% in Q3 2019, with total debt reaching close to $253 trillion. Global debt is set to grow faster in 2020 and is estimated to exceed $257 trillion by the end of Q1 2020, driven mainly by non-financial sector debt.
Negative-yielding debt hits a fresh record high of over $13 trillion; 75% of that is safe-haven government bonds; Low borrowing costs could provide some breathing room for EMs with high government financing needs; Climate change risks aren’t just domestic: over $29 trillion of G20 (mostly G7) cross-border investments are at risk. With awareness of these risks on the rise, our Green Flows Tracker shows net inflows of $2bn in Q2 (and record inflows for June); Insurer perspectives on LIBOR transition: the regulatory framework for EU insurers still requires a LIBOR-based term structure as the discount rate for insurance obligations.
Disconnect between Fed dots and market rate expectations set to persist; Negative-yielding debt hits a record high of over $12 trillion-putting the risk of asset price bubbles in focus; Further USD strength could pose significant challenges for non-bank borrowers in emerging markets and mature markets outside the U.S.; More monetary stimulus would widen the gap between the cost of equity and debt, triggering another sharp accumulation in corporate debt; Robust growth in Panda bond issuance.
A new set of private sector principles to enhance transparency in sovereign debt markets.
Trade tensions and fears of a global growth slowdown send term premia and bond yields sharply lower; Tariff spat weighs on trade volumes - but inflation expectations in check as importers bear the brunt of the cost; U.S. buybacks and dividends still going strong - but ebbing earnings repatriation flows could signal a decline; Emerging market debt vulnerabilities reflected in higher risk premia; To meet ambitious goals for sustainable infrastructure and the Paris commitments on climate change, low-and medium-income countries would need to spend as much as 4.5% of GDP.
Trade and geopolitical tensions drive investors to safe havens as market risks are reassessed; Greater sensitivity to political news flow reflects growing dominance of passive investing, high-frequency trading; New Principles for Debt Transparency aim to help address debt-related vulnerabilities in low-income countries; Green asset-backed securities have surged in popularity in recent years, but are still a niche product.
We are pleased to invite comments and suggestions on the latest draft of the voluntary Principles for Debt Transparency.? Feedback is welcomed from all stakeholders, including private sector financial firms; official sector bodies including international organizations, finance ministries and debt management offices; and civil society.
Eking out the late-cycle rally; Sustained improvement in external funding conditions would be a boon for highly indebted EMs; After debt relief, many low-income countries have seen debt/GDP ratios rise sharply in recent years; Rising pension obligations burden mature economies-and some emerging markets as well.