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US and China, borrowed the most in the first quarter, as global debt rose to a record above US$305 trillion, while the overall debt-to-output ratio declined.
Data from the Institute of International Finance showed on Wednesday that the world’s two largest economies
China's debt increased by $2.5 trillion over the first quarter and the US added $1.5 trillion. Total debt for the Eurozone declined for the third consecutive quarter.
“As central banks move ahead with policy tightening to curb inflationary pressures, higher borrowing costs will exacerbate debt vulnerabilities. The impact could be more severe for those emerging market borrowers that have a less diversified investor base,” the IIF report said.
Borrowing sources
Corporate debt outside banks and government borrowing contributed majorly to the increase in borrowing. Debt outside the financial sector rose to more than $236 trillion, nearly $40 trillion higher than the figure before the pandemic.
The global debt-to-GDP ratio fell to 348%, with major improvements seen in EU nations.
“Growth is expected to slow significantly this year, with adverse implications for debt dynamics,” said the IIF report.
Source - IIF
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