China and USA, the biggest borrowers

global debt - the Maghrebian economist

Data from the Institute of International Finance shows that the world’s two largest economies are the biggest borrowers in the first quarter of the year. This leads the world debt to reach a record level above 305,000 billion dollars. While the overall debt to GDP ratio decreases.

According to Reuters, the data indicates that China’s debt rose by $2.5 trillion in the first three months of the year. While the United States added $1.5 trillion to its debt. Total eurozone debt fell for the third consecutive quarter. Thus, the institute states: “The total global debt of emerging economies stood at $98.6 trillion in the first quarter of 2022. Compared to $89 trillion in the same period of 2021.”

Additionally, the Association of Major Global Banks and Financial Institutions adds that “public debt in emerging economies stood at $24.6 trillion in the first quarter of this year. Compared to $21.6 trillion in the first quarter of 2021”.

In addition, the global debt-to-GDP ratio falls to 348%. That’s about 15 percentage points from the record high a year ago. With, let us note, the greatest improvements in the European Union.

Moreover, according to a previous World Bank report, the pandemic has caused a huge increase in financing needs. And this, essentially in the countries eligible to borrow from the institution. Which will have to receive increased funding flows and also for a long time after this.

Finally, the WB stresses that it is necessary to work to maximize the potential advantages of countries eligible to borrow from the institution. And this is of great importance to increase the space available to countries from public financial resources. As well as to strengthen their ability to cope with the crisis, without increasing the risk of indebtedness.

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