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
LOL!
Median per capita global income $2,920. means half of the world’s population makes that or less. So, just for quick and dirty numbers for s***s and giggles…..
That lower half won’t pay any meaningful amount of that. Probably not the next 1/4 either. The top 10% or so are owed the debt, so maybe they “pay” by defaulting to themselves? So, maybe 15% owe and in some bizarre way might have some free dough to pay. But then we have to deduct those who don’t work and add unfunded liabilities. So, maybe each person with a few $ lying around owes $5,000,000. or $10,000,000. or make any silly number up you want. It can’t be paid so it won’t be paid. Gee, where is the IMF wrong, unless neofeudalism is the plan?
HAHAHAHAHAHAHAHA!!!
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.
The miracle of compounding, in reverse.
Btw one way to partly solve some of the per country debt is to net out the debt owed between countries. If country A owes country B X and Country B owes Country A X+2 then real debt owed is 2 by country B to country A.
This is an interesting point – I’m not sure of the mechanism used to measure debt, but if, using your example, the debt is counted as 2X+2, even though the net debt is 2, then the $247T number is meaningless. Also, I bought a new car recently, and was going to pay cash, but got a 0.9% rate with no costs (many of the 0% deals are alternatives to a $1,500 price cut, so not really 0% at all). Since I can put the money I was going to pay for the car into CDs and get 2%+, I thought,” why not?”.
Now I’m the proud holder of an auto loan that is in fact an investment. How many people have fixed rate loans that make complete economic sense and the capital to cover them if needed, that are skewing the total debt calculation?
Even at low interest rates the debt is growing too fast and eventually wont be able to be serviced. The Great Reset is upon us but we are merely waiting for the Minksy moment occurs and chaos ensues. People went ape over a few interest rate hikes and market correction and bear. There is surely going to be a mess when a country decides to stop buying IOUs that can no longer be paid for.
I agree Mitch, I can’t imagine what could possibly go wrong.
‘Median’ does not necessary mean ‘average’. The 3 most common ‘averages’ are mean, median and mode.
Mean is the “average”, the other two are NOT “averages”. Median is the middle observation. There can be more than one “mode” in a data series and it is not usually the same as the mean.
The Fed can hold an unlimited amount of debt instruments including MBS. They can just print the purchase money. Their MBS purchases are causing RE and RE rental inflation. The dollar will continue to have value to purchase US goods and services.The Fed’s asset purchase program won’t cause toilet paper or Budweiser price inflation, so all is well.
Trying not to imagine GDP hit due to any global slowdown along with increased debt to cope with unemployment that usually ensues.
It c
The story of 2019: That which cannot be paid will not be paid.
They probably used a “per household” debt number and mistakenly said it was per capita.
Wait…. Russia is not in there:
“$247T Through Q2 2018”
How long until it doubles again?
I did indeed divide by 7.6 B – will update the text
Thanks
The numbers are interesting, focussing on private debt instead of just total or government finances. However, private debt numbers can include pension schemes and non-private debt can include state run pensions and enterprises. This means the apparent measures are not comparable without knowing more about the structure of the economy and the debt.
Mish,
Nice article.
One tiny nit in: The global population in 2017 was 7.6 billion. $184 trillion divided by 6.6 billion is $24,210. Math is correct, but s/b “divided by 7.6 billion”….(?)
The real question is: how was all that the money ‘spent’? On productive assets allowing a payback, or (as I think of it) bags and bags of potato chips?
Inquiring minds would like to know….
Thanks Trump, Ryan and McConnell!
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.
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.
Well, it would seem the k$86 average is the mean, not the median, heavily skewed by the billions of poor people in the world.
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…”
Google “world average GDP per capita” without the quotes. Google gave me $17,300