By Rodrigo Campos
May 18, 2022
NEW YORK, May 18 (Reuters) – The world’s two largest economies borrowed the most in the first quarter as global debt rose to a record above $305 trillion, while the overall debt-to-output ratio declined, data from the Institute of International Finance showed on Wednesday.
China’s debt increased by $2.5 trillion over the first quarter and the United States added $1.5 trillion, the data showed, while total debt in the euro zone declined for a third consecutive quarter.
The analysis showed many countries, both emerging and developed, are entering a monetary tightening cycle led by the U.S. Federal Reserve with high levels of dollar denominated debt.
“As central banks move ahead with policy tightening to curb inflationary pressures, higher borrowing costs will exacerbate debt vulnerabilities,” the IIF report said.
“The impact could be more severe for those emerging market borrowers that have a less diversified investor base.”
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