As governments continue to borrow money to fund budget allocations, it may interest you to know just how much debt the world really is in and the International Monetary Fund (IMF) has supplied the data on global debt from the year 2015.
The IMF said on Wednesday last week that the world is swimming in a record $152 trillion ocean of debt and that the ocean of debt is continuing to rise. Despite that mountainous global debt, IMF is still encouraging countries to spend more in order to boost the flagging growth worldwide if they can afford it.
In its new Fiscal Monitor report, the International Monetary Fund said that both public and private global debt reached 225 percent of global economic output last year, up from about 200 percent in 2002. Of that record amount, the IMF said that about two-thirds of that 2015 total, which amounts to about $100 billion, is owed by private sector borrowers, and they noted that rapid increases in private debt often lead to financial crises.
Of course, the debt profiles vary from country to country but the report noted that the size of the debt could lead to private deleveraging to pay off immediate debts. Such a move could halt the still fragile economic recovery that the world is undergoing.
IMF Fiscal Affairs Director Vitor Gaspar told a news conference;
“Excessive private debt is a major headwind against the global recovery and a risk to financial stability,”
“Financial recessions are longer and deeper than normal recessions.”
The United States has de-leveraged since the 2008-2009 financial crisis, so the major concern shared in the report was for the buildup of private debt in China and Brazil. This build up was fueled in part by a long era of low-interest rates.
While the IMF did not directly make the point, its analysis exposes the claim that too much government spending is the cause of mounting financial problems.
IMF managing director Christine Lagarde is still, however, urging the institutions 189 member governments that have the ability to sustainably borrow and spend more, to do so.