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COVID-19 will cause bigger debt than World War II: research

The report highlighted that debt is forecast to surpass that of WWII levels

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COVID-19 will cause bigger debt than World War II: research. Source: pexels.com

GlobalData reported that although optimistic expectations for a global economic recovery, global debt is expected to skyrocket by the end of 2021 due to continued growth in government and corporate spending in response to the COVID-19 pandemic.

Developed countries have got the most of the world’s debt (70.2%) in the first quarter of 2021. Nevertheless, in the first quarter of 2021, there was an increase in the level of debt of developing countries to $86.2 trillion, which is 14.7% more than in the first quarter of 2020.

Japan, Italy and the United States all showed high levels of public debt as of 2020. Japan’s public debt as a percentage of its GDP was 256.2% in 2020, followed by Greece (213.1%), Italy (155.5%) and the United States. (127.1%). In the meantime, public debt in developing countries such as Brazil (98.9%), India (89.5%) and China (66.8%) has been relatively low, but has increased over the past year.

Matured markets such as the US, the UK, euro area economy and Japan witnessed a sharp rise in household, government, non-financial corporate and financial sector debt over last year. With higher debt comes higher obligation of interest payments, which curtails the opportunity for productive investments and, thereby, affects long-term sustainable economic growth
Gargi Rao, Economic Research analyst at GlobalData

In addition, private sector debt has also grown significantly in 2020 and is expected to continue to rise in 2021. The average debt of non-financial corporations worldwide was 104.1% in 2020, up 95.5% from 2019.

We’ve reported that virtual card operations value to increase by 370% worldwide in 5 years.

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