A new IMF report compiles debt data through the end of 2017. The numbers are staggering.
The IMF blog discusses New Data on Global Debt. The blog has a nice interactive graphic. I created some snips and pieced them together to show four countries simultaneously: US, China, Japan, and Germany.
Debt Synopsis
- Global debt has reached an all-time high of $184 trillion in nominal terms, the equivalent of 225 percent of GDP in 2017. On average, the world’s debt now exceeds $86,000 in per capita terms, which is more than 2½ times the average income per-capita.
- The most indebted economies in the world are also the richer ones. You can explore this more in the interactive chart below. The top three borrowers in the world—the United States, China, and Japan—account for more than half of global debt, exceeding their share of global output.
- The private sector’s debt has tripled since 1950. This makes it the driving force behind global debt. Another change since the global financial crisis has been the rise in private debt in emerging markets, led by China, overtaking advanced economies. At the other end of the spectrum, private debt has remained very low in low-income developing countries.
- Global public debt, on the other hand, has experienced a reversal of sorts. After a steady decline up to the mid-1970s, public debt has gone up since, with advanced economies at the helm and, of late, followed by emerging and low-income developing countries.
Debt by Size of Economy
- Advanced economies: There has been a retrenchment in debt build-up among advanced economies. Private debt, although marginally on the rise, is well below its peak. Also, public debt in advanced economies experienced a healthy decline of close to 2½ percent of GDP in 2017. To find a similar reduction in public debt we need to go back a decade, when global growth was some 1¾ percentage points higher than today.
- Emerging market economies: These countries continued to borrow in 2017, although at a much slower rate. A major shift occurred in China where the pace of private debt accumulation, although still high, decelerated significantly.
- Low-income developing countries: Public debt continued to grow in 2017 and, in some cases, reached levels close to those seen when countries sought debt relief.
Debt-to-GDP comparisons
Key Point
Here’s the key point: Global debt has reached an all-time high of $184 trillion in nominal terms, the equivalent of 225 percent of GDP in 2017.
Readers question this IMF claim: “On average, the world’s debt now exceeds $86,000 in per capita terms, which is more than 2½ times the average income per-capita.”
Let’s fact check. The global population in 2017 was 7.6 billion. $184 trillion divided by 7.6 billion is $24,210.
In 2013, the global median per capita income was $2,920. I don’t see newer numbers but the IMF is surely wrong somewhere.
Global Debt Through Q2 2018
The above chart from Bloomberg The Year in Money.
The Bloomberg numbers also cite the IMF. If accurate, the first half of 2018 added another $63 trillion in global debt.
Savings Glut
Yet, economists Larry Summers and Ben Bernanke believe there is a “savings glut”.
Mike “Mish” Shedlock
This article was originally published at Mish Talk.
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