Global debt drops but hits record high in developing countries, plus other economy stories you need to read this week



Top economy stories: Ukraine eyes 'sizeable' IMF support; Global debt drops but hits record in developing countries; Hong Kong to issue cash handouts. 


This weekly round-up brings you the latest stories from the world of economics and finance

Top economy stories: Ukraine looks to secure 'sizeable' IMF support; Global debt drops but hits record high in developing countries; Hong Kong to issue cash handouts to support economy.



1. Global debt drops for first time since 2015, but hits record level in developing countries

The amount of debt in the global economy saw its first annual fall in dollar terms last year since 2015, thanks partly to the post-pandemic rebound in growth, but also because of inflation. The nominal value of global debt declined by $4 trillion in 2022, bringing it fractionally back under the $300 trillion threshold breached in 2021, according to a report from global banking trade group the Institute of International Finance (IIF).

But the fall was driven entirely by wealthier countries, whose total debt declined by roughly $6 trillion to $200 trillion. The amount of developing world debt hit a new record high of $98 trillion, with Russia, Singapore, India, Mexico and Vietnam seeing the largest rises.


"The external public debt burden of many developing countries worsened due to sharp losses in local currencies against the dollar," the IIF said.

The ratio of global debt-to-GDP dropped by over 12 percentage points to 338% of GDP, marking the second annual drop in a row. But the improvement was again driven by developed markets, which saw an overall 20 percentage points fall to 390%. The emerging market debt ratio rose by 2 percentage points to 250% of GDP.

However, investment bank JPMorgan says the modest falls in developed-market debt in 2022 pale into insignificance give the huge rise since the global financial crash 15 years ago. It calculates that developed market public-sector debt as a share of GDP has surged to 122%, from 73% just before the crash.

"The step-change in debt in just 15 years raises questions of sustainability," JPMorgan analysts say.


2. Hong Kong to issue cash handouts to support economy


Hong Kong will give more cash handouts to all permanent residents and offer help to first-time home buyers to try and spur an economy recovery from prolonged COVID-19 restrictions, the city's government announced in its budget this week.

This is despite the global financial hub heading for a record deficit of HKD140 billion ($17.8 billion) in 2022-2023, Financial Secretary Paul Chan said. That is around 5% of GDP, and more than double the HKD56 billion the government initially estimated.

"I believe that Hong Kong's economy will visibly recover this year, and I remain positive," Chan said, adding that he would take a "moderately liberal" fiscal stance to sustain the impetus for economic recovery.



Source : [Global debt drops but hits record high in developing countries, plus other economy stories you need to read this week]( by (World Economic Forum) - World Economic Forum by (World Economic Forum) / February 24, 2023 logo


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