(Bloomberg) -- Global debt increased by around $7 trillion in 2024 to reach $318 trillion, a record annual high and a reason for financial markets to be cautious, according to the Institute of International Finance.
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Total debt as a share of gross domestic product also rose for the first time in four years as economic growth slowed, the group, which represents the global financial industry, said in a report. It predicted borrowing will remain high this year, especially in the US, France, China, India and Brazil.
The IIF said rising debt burdens meant governments should be “beware of bond vigilantes,” the term given to investors who push up interest rates in a bid to force policymakers to rein in budget deficits and debt.
“The increasing scrutiny of fiscal balances — particularly in countries with highly polarized political landscapes — has been a defining feature of recent years,” the group said. “While market reactions to rising government debt levels in the US have been relatively muted despite its debt remaining on a ‘non-stabilization path,’ robust economic activity, productivity growth, and the safe-haven status of US Treasuries continue to mask the deepening weaknesses in U.S. fiscal balances. However, not all countries enjoy such privileges.”
The 2024 increase in debt was nevertheless below the $16 trillion added in 2023 and the IIF predicted a slower pace of overall borrowing this year given the uncertain outlook.
“Looking ahead, we anticipate further slowdown in global debt accumulation,” the group said. “With global economic policy uncertainty at record highs — exceeding levels seen at the peak of the pandemic — and borrowing costs still elevated, the more cautious stance among borrowers is likely to hinder private sector demand for credit.”
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