$184T in Global Debt in 2017, $247T Through Q2 2018: What Can Possibly Go Wrong?

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

Comments
No. 1-22
2banana
2banana

I don't think this stat is correct.

World wide. The average wage is something like $2,000/year. Median wage is even lower.


"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..."

Mike Mish Shedlock
Mike Mish Shedlock

Editor

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 6.6 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.

shamrock
shamrock

On the other hand, global net worth was $256T in 2016, so there are quite a bit of assets backing all that debt. That's a debt/equity ratio of around 42%, by my calculation.

AWC
AWC

Lies, damned lies and statistics. All that matters in the politics of central banking.

Latkes
Latkes

According to the numbers above, Italy is in better shape than the US and Canada is ready to implode.