Why Developing World Debts Are Hitting Records

According to the Institute of International Finance (IIF, its report is available from RBC), global total debt, which includes obligations of governments, banks, companies and households, remained almost unchanged in the third quarter of 2021 ($296 trillion) after a significant increase - by $32 trillion - in 2020. In relation to the volume of the world economy, the debt even decreased - from 353% of GDP at the end of the second quarter to 350% of GDP in September.

However, the decline in global debt occurred exclusively at the expense of developed countries, while in emerging markets (emerging markets, EM) debt increased by another $5.7 trillion from the beginning of 2021 to the end of September and updated the record, amounting to $92.5 trillion, follows from calculations IIF. More than 80% of the increase in debt in developing countries since the beginning of the pandemic has come from China , but even excluding China, the debt load of EM economies in the third quarter reached $36.4 trillion, also a new record figure.