LONDON: The post-pandemic rebound in world growth and inflation last year meant the amount of debt sloshing around the global economy saw its first annual fall in dollar terms since 2015, a widely tracked study has shown.
The Institute of International Finance report published on Wednesday estimated that the nominal value of global debt declined by some $4 trillion, bringing it fractionally back under the $300 trillion threshold breached in 2021.
With borrowing costs on the rise, particularly for emerging markets, the retrenchment was driven entirely by wealthier, mature markets though, which as a group saw total debt decline to $200 trillion from $206 trillion a year ago.
In contrast, the amount of developing world debt hit a fresh record high of $98 trillion with Russia, Singapore, India, Mexico, and Vietnam seeing the largest individual rises.
Stronger economic activity and higher inflation meanwhile, both of which erode debt levels, saw the global debt-to-GDP ratio drop over 12 percentage points to 338% of GDP, marking the second annual drop in a row.
Again, though, the improvement was driven by developed markets which saw an overall 20 percentage points fall to 390%. The emerging market debt ratio rose by 2 percentage points meanwhile to 250% of GDP, largely driven by China and Singapore.
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