World debt increased more during the pandemic than during the 2008 financial crisis, according to IIF

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Governments and countries racked up more debt during the COVID-19 pandemic than during the 2008-09 financial crisis, a major trade group said on Wednesday. The Institute of International Finance said that the global debt-to-GDP ratio increased 35 percentage points to more than 355% in 2020, increasing by $ 24 trillion to $ 281 trillion. The global debt ratio increased 10 percentage points in 2008 and 15 points in 2009.

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The IIF said that government debt rose to 105% of GDP, from 88% in 2019. Mature countries added $ 10.7 trillion in public debt to try to contain the crisis, the IIF said. The IIF said that world government debt should rise another $ 10 trillion this year. The rate of vaccination against COVID-19 differs considerably between countries, and the difficulty in launching the vaccine could delay recovery, leading to further accumulation of debt, the trade body said. Switzerland was the only mature market economy to see a modest decline in the public debt index, the IIF added.

Non-financial private sector debt increased from 124% to 165%. Many large companies in the US and Japan took advantage of supportive government measures to increase their cash reserves. The IIF said the decline in the number of companies that filed for insolvency has been extraordinary, but depends on continued support from the government.