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Global Public Debt Reaches $135 Trillion

Global Public Debt Reaches $135 Trillion

Monday, 13 November, 2017 - 12:15
The International Monetary Fund logo is seen inside its headquarters. Reuters

A number of credit rating agencies came to the conclusion that world public debt will stabilize in 2018 at about the same figures as 2017, but Moody's compared the magnitude of relative debt to that of the global financial crisis in 2008.

On the other hand, the IMF estimates mounting public debt at about $135 trillion. The fund also sounded the alarm over "economic growth colliding with debt."

Debt levels are not the same in most countries, accounting for 105 percent in developed countries, 50 percent in developing countries.

According to most forecasts, developed countries’ debt trend is decreasing while increasing in emerging countries under the threat of bankruptcy, such as Venezuela, Congo and Mozambique.

Moody's also cited that the ratio of global sovereign debt to global economic output is now 75 percent, compared to 57 percent a decade ago.

One of Big Three credit rating agencies, Fitch Ratings, forecasts for 2018 show that sovereign debt will not change significantly as in 2016 and 2017.

The negative outlook currently covers only 16 percent of categorized countries, compared to last year’s 26 percent.

Next year is expected to witness a revision lowering of credit ratings, especially since 75 percent of those ratings are labeled real-time stable.

In 2016 and for the first half of 2017, agencies lowered the credit ratings in 26 Middle East and African countries in return for raising the rating of one country in the region.

In Europe and Russia, 11 downgrades went up against 10 upgrades for the same time frame.

Asia scored one boost versus 6 reductions, and Latin America had 13 downgrades versus six upgrades.

In a report, Moody’s reported expectations for the global economy to grow slightly over 3 percent in 2018, similar to its 2017 estimate. This is considerably above the 2.5 percent growth rate in 2016. In 2019, too, the group expects growth to stabilize around 3 percent.

More so, Moody’s said the current strong growth momentum in advanced economies will be carried over into 2018. Growth in G20 advanced economies will be stable around 2.0 percent in 2018 and through 2019, compared with 1.5 percent in 2016.

However, many of the advanced economies, including the US, Canada, Japan, Germany, France and Italy, which are experiencing above trend growth rates, will likely slow over time to their long-term potential.

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