GLOBAL debt has reached an all-time high, soaring by $10 trillion to a whopping $307 trillion in the first half of 2023, as reported by the Institute of International Finance (IIF).
This is a shocking 50% increase compared to a decade ago.
Countries like the US, UK, and Japan are major contributors to this surge, partly due to high interest rates.
The report also reveals that the global debt-to-gross domestic product (GDP) ratio, which had been decreasing for several quarters, is now rising again, hovering around 336% in the first two quarters of 2023.
Most of this debt buildup is coming from developed countries, including the US, Japan, the UK, and France.
Emerging markets like China, India, and Brazil also witnessed significant increases in debt.
The IIF expresses concern about the “alarming levels” of government debt in many emerging markets.
However, it mentions that consumer debt in developed markets is manageable, which means central banks may have room to tighten monetary policies if inflation remains a concern.
UK inflation unexpectedly drops to 6.7% in August
In a separate economic development, the United Kingdom experienced an unexpected drop in inflation, with the rate falling to 6.7% in August.
Economists had predicted a higher figure. Factors such as lower food prices and fluctuations in accommodation service costs contributed to this surprising decline.
This has led to speculation about whether the Bank of England will pause its recent trend of raising interest rates.
The Bank of England was expected to announce another interest rate hike, potentially bringing the main bank rate to 5.5%, its highest level in years.
However, following the unexpected drop in inflation, market sentiment shifted, with the likelihood of a rate hike pause increasing from 20% to nearly 50%.
These economic developments are closely watched by financial markets and policymakers.
The Bank of England’s upcoming monetary policy decision will be crucial, as it aims to control inflation and meet its 2% target.
