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In a new edition of the Global Debt Monitor report of the Washington-based International Finance Institute (IIF), it is recognized that global debt has accelerated its growth rate in the first quarter of 2018, the first quarterly increase since the third quarter of 2016.
In the first quarter of 2018, global debt has increased by US $ 8 billion, accumulating US $ 30 billion since the end of 2016.
L & # 3939; A global badociation formed by financial entities-IIF- was established in 1983 to seek an exit to the debt crisis. Data from the report "Time to pay the piper", in English, shows that the global debt is $ 247 billion.
The relationship between debt and GDP – overall – was 318%, very high numbers that could trigger some alarms.
The report adds that this increases in the debt-to-GDP ratio, combined "with world growth slowing down and becoming more divergent, and the United States, with steady rate increases," propels that " concerns about credit risk are coming back to the fore, even in many mature economies. "
The increase in debt was recorded in all sectors: households, non-financial entities and the public sector accounted for $ 186 billion US $ of the total. Financial sector debt has reached a historic high of about $ 61 billion, even at a slower pace.
In the participation of the sectors of the economy in debt by country, Canada, France and Switzerland set records. debt of non-financial entities. While family debt has increased significantly in Switzerland and Denmark last year. Countries that have recorded growth in the public debt-to-GDP ratio are EE. United States, Australia and Greece.
In the United States, the report states that "non-financial firms are particularly exposed to higher interest rate risk since the combination of high debt levels ($ 20 billion). dollars) and greater dependence on bonds (43% of the total loan mix) makes companies more vulnerable to higher prices as the Fed continues to raise interest rates. It is also important to remember that 25% of US corporate debt has a variable rate. "
In addition, this scenario of increased financial volatility and steady rise in interest rates affects non-US borrowers." In markets considered mature, approximately 30% of bonds are denominated in dollars, approximately 900,000 millions of them are expected to mature in the first quarter of next year.
You can read: New Tensions in the International Economic Situation
What happens in the "? The current scenario shows an increase in the cost of financing in dollars for "emerging markets," in the first quarter of 2018, emerging non-financial debt reached a record $ 58.5 billion. dollars
Over the last year, Colombia, Argentina and the Philippines have been identified by the IIR report as countries posting a significant rise in corporate debt relative to their GDP. In turn, public debt has increased significantly in Brazil, Saudi Arabia, Nigeria and Argentina. Debt interest expenditures in "emerging" countries will reach nearly 2 percent of GDP this year and next year, IFI said.
The opposite trend has been verified in Turkey and China, where the public debt has fallen. But domestic debt relative to GDP has increased in China by almost 50%, in Chile by more than 45% and in Colombia by 30%. The financial sector debt of the "emerging" has grown by more than $ 1 trillion since the first quarter of 2017, with Argentina and Poland being the two protagonists of a sharp rise.
Foreign Currency Debt (FX) Given its heavy reliance on foreign currency debt, Argentina, Hungary, Turkey, Poland and Chile are more vulnerable fluctuations in capital flows, according to the report. In China, foreign currency debt rose from $ 110 billion in the first quarter of 2010 to more than $ 785 billion in the first quarter of 2018.
Argentina: Higher debt and higher financial risk [19659002] According to the report, a growing portion of bank deposits in Argentina, Turkey and Mexico are denominated in foreign currencies. While deposit dollarization provides a buffer for companies with high levels of dollar debt, it also reduces the ability of central banks to control liquidity and encourages commercial banks to increase foreign currency lending to equalize foreign currency positions. 19659018] In addition, according to the report, Argentina is one of the "emerging" with high maturities of dollar bonds in 2019 and a high risk rate that would make it difficult to renew them.
The current economic crisis in Argentina unleashed Constant exchange rates are an expression of these trends. The MSCI's qualification of "emerging market" that the Macrist Government celebrated as an upgrade, only reached the deepening of structural contradictions. Speculators continue to bid for a heavier dollar hedge, the dollarization of private debt from Letes' investment that was subscribed with Lebac, the increase in public debt.
In the first quarter of 2018 only the country's foreign debt recorded an increase of 19,192 million US dollars over the previous quarter; In recent months, Argentina has also received a stand-by loan agreed with the IMF for 50,000 million US dollars.
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