Global Debt has Increased 50 Percent in the Last Decade

March 12, 2019

After the last economic crisis, central banks tried to spur economic growth by easing lending rates, which has led to an explosion of debt in the last decade. Worldwide total debt, including governments, businesses, and households, rose to $178 trillion as of June 2018, according to a new report from credit rating agency S&P. This amounts a 50 percent increase in the last decade.

The bulk of that debt, $62.4 trillion, is held by governments. Public borrowing has led to a 77 percent increase in government debt since the economic recovery began. American households have been more conservative, increasing just $1 trillion, or 7 percent, in the last 10 years, for a total of $15.3 trillion. Chinese households haven’t been as thrifty, increasing their debt by 716 percent in that same time period.

Though the numbers may look staggering, S&P says that a credit downturn wouldn’t be as bad as the 2008 financial crisis. Their confidence is based on the nature of the debt. Governments generally have a low risk of default. One area of worry that S&P noted was in corporate debt. Globally, corporations have amassed $23.8 trillion in debt since the crisis, and much of that exists just above the “junk” level. Analysts worry that if this debt is downgraded, these corporations would have trouble servicing their loans.

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