global borrowing hits record 217tr
Last Updated : GMT 06:49:16
Arab Today, arab today
Arab Today, arab today
Last Updated : GMT 06:49:16
Arab Today, arab today

Global borrowing hits record $217tr

Arab Today, arab today

Arab Today, arab today Global borrowing hits record $217tr

Global debt levels have climbed
London - Arab Today

Global debt levels have climbed $500 billion in the past year to a record $217 trillion, a new study shows, just as major central banks prepare to end years of super-cheap credit policies.
World markets were jarred this week by a chorus of central bankers warning about overpriced assets, excessive consumer borrowing and the need to begin the process of normalizing world interest rates from the extraordinarily low levels introduced to offset the fallout of the 2009 credit crash.
This week, US Federal Reserve chief Janet Yellen has warned of expensive asset price valuations, Bank of England (BoE) Gov. Mark Carney has tightened controls on bank credit and European Central Bank (ECB) head Mario Draghi has opened the door to cutting back stimulus, possibly as soon as September.
Years of cheap central bank cash have delivered a sugar rush to world equity markets, pushing them to successive record highs. But another side effect has been explosive credit growth as households, companies and governments rushed to take advantage of rock-bottom borrowing costs.
Global debt, as a result, now amounts to 327 percent of the world’s annual economic output, the Institute of International Finance (IIF) said in a report late on Tuesday.
One of the most authoritative trackers of global capital flows, the IIF report highlighted “rollover” risks, especially in emerging markets that have borrowed in hard currencies such as euros and dollars.
Such debts will become costlier to service if Western interest rates rise and currencies strengthen.
While US interest rates have already been raised four times, the euro has surged to one-year highs after Draghi’s comments on Tuesday, while German 10-year government bond yields — the benchmark for euro-area borrowing — have doubled over the past two days.
The Fed too seems intent on continuing to tighten policy — Philadelphia Fed President Patrick Harker said this week balance sheet normalization should be put on “autopilot.”
And despite Britain’s tepid economy, several BoE rate-setters too voted this month to raise interest rates.
The IIF said the surge in indebtedness was largely down to a $3 trillion rise in debt levels across the developing world, which now has debt totaling $56 trillion. That is 218 percent of their combined gross domestic product (GDP), a 5-percentage point rise over year-ago levels, it said.
China accounted for $2 trillion of this rise, with its debt now at almost $33 trillion, data showed.
“Rising debt may create headwinds for long-term growth and eventually pose risks for financial stability,” the IIF said.
“In some cases, this sharp debt build-up has already started to become a drag on sovereign credit profiles, including in countries such as China and Canada.”
The report acknowledged that advanced economies had continued to deleverage, cutting total public and private debt by more than $2 trillion in the past year, but this was mainly due to the euro zone. Total US debt rose $2 trillion to more than $63 trillion in the first quarter of this year.
But even in the euro zone, household borrowing is at a post-crisis high, data showed this week. The BoE plans to soon publish tighter rules on consumer lending and is bringing forward checks on banks’ ability to cope with consumer loan losses.
But it is in the developing world that stresses are most likely to emerge, the IIF noted.
First, emerging hard currency-denominated debt rose by $200 billion in the past year — growing at its fastest pace since 2014 — and 70 percent of this was in dollars, its report found.
Second, emerging markets have a hefty debt repayment schedule with more than $1.9 trillion of emerging bonds and loans falling due by end-2018, and 15 percent of this denominated in dollars. The biggest redemptions were in China, Russia, Korea and Turkey, the IIF added.
“Rollover risk is high,” the report said.
Any significant central bank policy shift risks derailing emerging debt markets, which have delivered robust returns in recent years and are up 7-10 percent in dollar terms in 2017.

Source: Arab News

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

global borrowing hits record 217tr global borrowing hits record 217tr

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

global borrowing hits record 217tr global borrowing hits record 217tr

 



GMT 12:47 2016 Thursday ,01 September

'La La Land' musical masterpiece dazzles Venice film fest

GMT 12:42 2017 Monday ,20 February

Dalia al-Behairy begins 'Yawmiyat Zoga Mafrosa'

GMT 19:01 2017 Wednesday ,30 August

Oil prices down as US reels from Harvey

GMT 04:19 2017 Monday ,08 May

National forces attack mercenaries in Taiz

GMT 19:21 2017 Sunday ,07 May

Iranian Film Week opens in Baghdad

GMT 21:33 2017 Sunday ,30 July

Arab Quartet meeting kicks off in Bahrain

GMT 17:17 2016 Friday ,07 October

Aleppo bleeds as US and Russia spar

GMT 12:03 2015 Monday ,21 December

Nepal protester killed in constitutional crisis clash

GMT 09:47 2016 Thursday ,22 December

Trump vows to cut F-35 spending, as leaked memo

GMT 21:44 2017 Friday ,15 December

King establishes Hawar Development Committee

GMT 20:57 2017 Tuesday ,16 May

Naval Forces rescue 23 tourists in Hurghada

GMT 12:56 2017 Monday ,11 December

Lyon leave it late, Balotelli with Nice winner

GMT 06:18 2017 Thursday ,19 October

Russian delegation meets with Julphar chairman

GMT 21:20 2017 Monday ,23 October

Nasr, delegation of London Stock Exchange

GMT 14:40 2012 Saturday ,10 March

Magdy Al-Galad steps down

GMT 09:47 2017 Sunday ,12 March

Cat Camp in New York attracts cat lovers

GMT 14:57 2016 Friday ,09 September

Madonna, Ritchie settle child custody dispute

GMT 23:52 2017 Monday ,18 September

UAE economic growth boosting logistics sector
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday