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Alternative Market Briefing

Global government debt to hit record $71.6tn in 2022

Thursday, April 07, 2022

Laxman Pai, Opalesque Asia:

Global sovereign debt is expected to climb by 9.5% to a record $71.6 trillion in 2022 while fresh borrowing is also broadly set to remain elevated, said a study.

The $6.2tn increase in debt will primarily be driven by the US, Japan, and China, but every country across the world is likely to see its borrowing levels increase, said Janus Henderson in its report.

According to the second annual Sovereign Debt Index by the British asset manager, global government debt jumped 7.8% in 2021 to $65.4 trillion as every country assessed saw borrowing increase, while debt servicing costs dropped to a record low of $1.01 trillion, an effective interest rate of just 1.6%.

However, debt servicing costs are set to rise significantly in 2022, climbing around 14.5% on a constant-currency basis to $1.16 trillion.

Every country Janus Henderson examined saw a borrowing rise in 2021. China's debts rose fastest and by the most in cash terms, up by a fifth, or $650 billion. Among large, developed economies, Germany saw the biggest increase in percentage terms, with borrowing rising by one-seventh (+14.7%), almost twice the pace of the global average.

Despite surging levels of borrowing, debt servicing costs remained low. Last year, the effective interest rate on all the world's government debt was just 1.6%, down from 1.8% in 2020. This brought the total cost of servicing the debt down to $1.01 trillion, compared to $1.07 trillion in 2020. The strong glo......................

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