Reuters S&P Global:

Global debt to hit $200 trillion

By –
Shambhavi Jha
2027734
Christ University, Bangalore
 CONTENT

1. News Description

2. News Analysis

3. Business Implication

4. References
 News Description
• Global debt is set to reach $200 trillion, or 265% of the world's annual economic
output, by the end of the year, S&P Global has forecast — although it doesn't expect a
crisis any time soon
• The credit ratings giant said it amounted to a 14-point rise as a percentage of world
GDP
• Debt crisis, a situation in which a country is unable to pay back its government debt. A
country can enter into a debt crisis when the tax revenues of its government are less
than its expenditures for a prolonged period
 Analysis
• Global debt-to-GDP has been trending up for many years; the pandemic simply
exacerbated the rise
• Spurred by a sharp rise in government and corporate borrowing as the Covid-19
pandemic wears on
• Rise in debt levels was well below average quarterly gains seen from 2015 to 2019,
overheating in the global economy was due to the level of outstanding loans made to
risky companies.
• As long as the world economy gets back on its feet after the pandemic, the global
debt-to-GDP ratio should ease back to 256% by 2023

4
 Business Implication

• The projected 14% surge in global debt-to-GDP in 2020 is unlikely to

cause a near-term debt crisis, provided economies recover.
• A big deciding factor would be how soon will the vaccines be widely
distributed
• If Interest rates remain very low, and borrowing behavior remain
moderate then, near- term debt crisis would be unlikely
• It is expected that the debt growth of corporates, governments, and
household will ease post pandemic
References
THANK YOU