CNBC: Government Debt Tab Hits $66 Trillion, 80% of Global GDP, Fitch Says

January 23, 2019

Article by Jeff Cox in CNBC Financial

Governments are continuing to run up huge debt levels, with emerging countries helping push the total global IOU to 80 percent of gross domestic product.

The worldwide tab through 2018 is now up to $66 trillion, about double where it was in 2007 just as the financial crisis was beginning to unfold, according to Fitch Ratings' new Global Government Debt Chart Book released Wednesday.

"Government debt levels are high, leaving many countries poorly positioned for financial tightening as global interest rates begin to move higher," James McCormack, Fitch's global head of sovereign ratings, said in a statement.

After a decade in which global central banks kept interest rates low and made running up debt far less expensive, monetary policy is in a normalization period. The U.S. Federal Reserve, for instance, has raised interest rates eight times since late 2015, and its counterparts around the world are ending the extreme easing conditions from the financial crisis.

Debt in developed countries has remained fairly steady around $50 trillion since 2012, though that's not true of the U.S. Total public debt for the American government has jumped from $15.2 trillion to $21.9 trillion, or 44 percent, during the period, Treasury Department data show.

Fitch noted that the total U.S. debt is nearly 10 times the size of France, Germany, Italy and the UK combined.

While the U.S. debt stands out among larger economies, it has plenty of company in the developing world.

The 11 governments rated "AAA" carry 40 percent of the debt load. Lower-rated "B" countries accounted for about 3 percent of global government debt.

U.S. debt began accelerating at the turn of the 21st century. The total jumped 85 percent to $10.6 trillion during former President George W. Bush's two terms, another 88 percent to $19.9 trillion under Barack Obama and has risen 10 percent during the first two years of Donald Trump's term.

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