Global debt hits record high of $338T in Q2

​​​​​​​By Gokhan Ergocun

ISTANBUL (AA) - The world's total debt rose to a record of nearly $338 trillion in the second quarter, up $21 trillion on a yearly basis, the Institute of International Finance (IIF) said Thursday.

The scale of the increase was comparable to the surge in the second half of 2020, when policy responses to the coronavirus pandemic triggered an unprecedented surge in global debt, said the IIF.

The weakening of the US dollar and easing of global financial conditions, loose policy stances of major central banks, including the European Central Bank, the Bank of England, the People's Bank of China and the Swiss National Bank, were the primary drivers of the current increase.

China, France, the US, Germany, the UK and Japan saw the largest increases in debt levels in dollar terms.

The total debt of advanced economies reached $228.2 trillion in the second quarter, while total debt in developing countries hit $109.5 trillion.

Looking at the distribution of global debt, household debt rose to $63 trillion in the second quarter, debt to non-financial corporations was at $97.4 trillion, governments' debt hit $101.3 trillion and financial companies came in at $76 trillion.

The ratio of total debt to global GDP continued to decline in the first half of the year, falling below 324%.

While the trend differed across sectors, the ratio of governments' debt to GDP continued to rise, while private sector debt ratios declined.

The sharpest increases in total debt ratios by country were recorded in Canada, China, Saudi Arabia and Poland.

Conversely, Ireland, Japan and Norway saw significant declines in their debt-to-GDP ratios.

In Türkiye, household debt decreased from 10.1% to 9% in the second quarter compared to the same period last year.

According to the IIF report, borrowing needs in many advanced economies remain well above pre-pandemic levels, with no significant signs of reversal.