IIF warns: Global debt reaches a new high in 2024, with an increase of nearly 7 trillion, urging investors to proceed with caution
The International Institute of Finance (IIF) report shows that global debt will increase by nearly $7 trillion in 2024, reaching a total of $318 trillion, a record high. The slowdown in economic growth has led to an increase in the ratio of global debt to GDP, particularly in countries such as the United States, France, India, and Brazil. Although U.S. debt is on an unstable trajectory, market reactions have been mild, but the pace of global borrowing is expected to slow down as policy uncertainty and high borrowing costs make borrowers more cautious
According to the Zhitong Finance APP, the Institute of International Finance (IIF) recently released a report stating that global debt is expected to increase by nearly $7 trillion in 2024, reaching a record total of $318 trillion. This growth trend is a significant reason for the cautious attitude in financial markets.
The report points out that due to the slowdown in economic growth, the ratio of global debt to Gross Domestic Product (GDP) has risen for the first time since 2020. The Institute of International Finance, as a representative organization of the global financial industry, predicts that this year's debt levels will remain high, particularly in countries such as the United States, France, India, and Brazil.
The organization emphasizes that the rising debt burden means that major governments need to be vigilant about the movements of the "bond vigilantes." The so-called "bond vigilantes" refer to investors who force policymakers to control budget deficits and debt by pushing up interest rates.
The report mentions: "In recent years, scrutiny of fiscal balance has become increasingly stringent, especially in countries with highly polarized political landscapes. This trend is particularly evident." Although U.S. debt remains on an "unstable trajectory," the market's reaction to the rising levels of U.S. government debt has been relatively mild.
Strong economic activity, productivity growth, and the safe-haven status of U.S. Treasury bonds have, to some extent, masked the deepening weaknesses in U.S. fiscal balance. However, not all countries enjoy such privileges.
It is noteworthy that the debt increase for 2024 is lower than the $16 trillion increase in 2023. Given the uncertainty of the outlook, the Institute of International Finance predicts that the overall borrowing pace will slow this year.
"Looking ahead, we expect the accumulation of global debt to further slow down," the organization stated. "Due to the highest level of uncertainty in global economic policy—exceeding even the peak levels during the pandemic—and with borrowing costs remaining high, borrowers are likely to adopt a more cautious stance, which may hinder credit demand from the private sector."