The weight of the world debt represents from now on 324 % of the world GDP(GROSS DOMESTIC PRODUCT), warns a study of International Institute of Finance. This report is spread while several of the main central banks of the world get ready to harden their monetary policy, thus to end a decade of very cheap credit.
The set of the debts accumulated in the world represents from now on 226.000 billion dollars (192.000 billion euros), a record amount which amounts in more of three times the annual economic activity of the planet - 324 % of the world GDP exactly -, show on Wednesday a study of International Institute of Finance (IIF).
The study puts forward among others the risks to which are exposed certain emerging countries which borrowed massively in currencies such as the euro or the US dollar. According to the calculations of the IIF, authoritative regarding follow-up of the international financial flows, approximately 1.700 billion dollars of debts will have to be paid off or re-financed in developing countries by the end of 2018, with as a bonus a likely increase of the debt servicing if the interest rates and the currencies of the big western countries go back up.
According to the study, the debts in "strong" currencies of emerging countries exceed 8.200 billion dollars, that is about 15 % of the total debts of developing economies.
If he notes that the rhythm of the increase of the global debt slightly decreased, the IIF also explains that the trend accelerated on the contrary in China, where the debts of companies increased by 660 billion dollars in 2016, a growth much superior to that observed in the United States before the financial crisis of 2008 or in Japan before the banking crisis of 1991.
Increasing part of companies " in tension "
The study adds that companies have increasing difficulties assuming their debts, the cover ratios of the moderate interests ( ICR) suggesting that the part of the deprived borrowers " in tension " exceeds clearly its level of 2010.
These companies so represent more than "corporate" 20 % of the debts of Brazil, India and Turkey and about 16 % in China. Among the developed countries, the ratio ICR deteriorated in Canada, in Germany and in France, while they improved in Japan and in the United Kingdom, specifies the IIF.
" Even with low world rates, many non-financial companies go to difficulties assuring the service of their debt ", warns the study.
The end of the rates historically low?
This report is broadcast while several of the main central banks of the world get ready to harden their monetary policy, thus to end a decade of very cheap credit.
The European Central Bank (ECB) should indeed announce on Thursday a reduction of its purchases of titles on markets, the Bank of England (BoE) could raise its intervention rate next week for the first time in ten years and the American federal Reserve moves towards its third increase of rate from the beginning of the year.
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If the years of historically low rate which followed the financial crisis and the big recession allowed the world stock markets to reach unprecedented levels, they also favored the explosion of the household debt, the companies and States.