Global Debt Reaches Record Levels, Sparking Economic Concerns
Global debt soared to a record $337.7 trillion in Q2, driven by a weaker U.S. dollar and accommodating central bank policies. While debt-to-GDP ratios declined in some countries, emerging markets hit a new high, prompting concerns about fiscal sustainability amid geopolitical tensions and rising government debts.
In a striking development, global debt reached an unprecedented $337.7 trillion at the close of the second quarter, according to a report released on Thursday. The increase was driven by more favorable global financial conditions, a softer U.S. dollar, and an accommodating stance from major central banks.
The Institute of International Finance (IIF) reported that global debt surged by over $21 trillion in the first half of the year, with significant spikes recorded in nations such as China, France, and the United States. The report noted that some debt growth could be attributed to the declining strength of the U.S. dollar.
Looking ahead, the IIF warned that rising military expenditures and increasing government debts, particularly in the G7 and China, could heighten pressures on national finances. The organization expressed concerns over fiscal strains and the potential impact of 'bond vigilantes' as bond market reactions become fiercer, especially in mature economies.
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