The amount of debt held by both mature and emerging markets tracked by the Institute of International Finance (IIF) rose to a record $247 trillion in the first quarter of 2018, up 11.1% from the same period a year ago.
The report released by the IIF said the ratio of debt to gross domestic product of these nations, which include the Group of Seven industrialized nations and the majority of emerging market economies, increased to 318%. That is the first quarterly increase in the debt-to-GDP ratio since the third quarter of 2016.
"With global growth losing some momentum and becoming more divergent, and U.S. rates rising steadily, worries about credit risk are returning to the fore - including in many mature economies," Reuters cited the report as saying.
Debt levels for household, non-financial corporate and general government sectors rose to $186 trillion in the first quarter of 2018. Financial sector debt rose to a record high $61 trillion.
Emerging market debt rose by $2.5 trillion to a record $58.5 trillion in the first quarter.
Variable-rate debt holders face greater risks because of rising benchmark interest rates, the IIF said, noting that over 10% of emerging market corporate bonds are pegged to this asset class.
Mature economies are even more reliant on variable rate debt, the report said, with the ratio among G7 economies ranging from 18% in Canada to 38% in the United States and Italy.
Given its heavy reliance on foreign currency debt, Argentina, Hungary, Turkey, Poland and Chile are more vulnerable due to fluctuations in capital flows, according to the report. China's foreign currency debt rose from $110 billion in the first quarter of 2010 to more than $785 billion in the first quarter of 2018.
A leading analyst of the National Energy Security Fund, a lecturer at the Financial University under the Government of the Russian Federation, Igor Yushkov, speaking to Vestnik Kavkaza, noted that an acceleration of global debt accumulation, first of all, is connected with increased indebtedness of states.
"High debt occurs when government spending increases. For example, increased spending on supporting US economy could made up the lion's share of all those debts reflected in statistics for the first quarter, because the United States is the world's largest debtor (and the world's largest creditor). When the US intensifies its work in other countries, military campaigns in Iraq and Afghanistan, they usually take on debt, "he explained.
"The US is forcing the rest of the NATO member countries to increase defense spending - these higher military expenditures generate a noticeable increase in European countries' public debt. In addition, as oil prices increase, companies have to borrow to cover energy costs. In my opinion, most of the dynamics are still provided by the US and its spending, since Washington prefers not to spend cash that can be lent to others, but issue debt securities," Igor Yushkov stressed.
"We can say that this is a factor of globalization, that everyone lends each other money, the world financial system is based on it," the leading analyst of the National Energy Security Fund added.
