Emerging markets drive global debt to record $303 trillion - IIF

• The Institute of International Finance said on Wednesday that the Emerging market borrowing led by China inflated the global debt mountain to a record $303.0Tn in 2021, although the global debt-to-GDP ratio improved as developed economies rebounded. The $10.0Tn rise in the global debt pile was down from the $33.0Tn increase in 2020 when COVID-19-related expenditure soared. 
• But more than 80% of last year's new debt burden came from emerging markets, where total debt is approaching $100.0Tn. That means emerging markets have started in 2022 facing record-high refinancing needs just as the Federal Reserve prepares to raise interest rates after years of record-low borrowing costs. 
• While the pace of accumulation slowed in 2021, EM government debt levels remain elevated. This slowdown is in line with the moderation in government budget deficits seen over the past year. The IIF authors noted that since the onset of the pandemic, some EM governments seem more reliant on off-budget borrowing, pointing to rising non-financial corporate debt levels in China, Russia and Saudi Arabia. 
• The global debt-to-GDP ratio fell to 351% in 2021 from an all-time high of more than 360% in 2020, although last year's rate is some 28 percentage points above pre-pandemic levels.

(Source: Reuters)