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World debt reached USD 233 billion and is expected to continue growing in 2021

Key facts:

Current indebtedness stands at 355% of global GDP, according to IFI.

Experts estimate that by 2021 more than USD 70 billion could be added to the debt.

233 billion dollars is the historical figure that the world debt has reached by the end of 2020 and the beginning of 2021. The coronavirus pandemic, together with the economic stimulus policies adopted by various governments worldwide, are the causes that the Debt will skyrocket and continue to grow by leaps and bounds.

Members of the Institute of International Finance (IFI), represented by the expert Emre Tiftik, point out that debt increased by about $ 20 billion over the past year. This represented 7 billion dollars more than what was stipulated by financial organizations, placing indebtedness at 355% of global GDP.

The entity points out that countries such as Spain, France and Greece are the ones that have most committed to state loans. Likewise, countries like China have experienced their biggest increase in their debt-to-GDP ratio. Other emerging economies, such as Turkey, South Korea and the United Arab Emirates, also show worrying numbers. However, public debt is especially high in nations like South Africa and India.

According to the IFI, the governments that are experiencing the largest budget deficits will increase their debt by some 8.3 billion dollars by 2021. In this sense, It is expected that this year, an additional 76.2 billion dollars will be added to the existing debt..

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More and more governments are suffering from a larger budget deficit. Source: avanti_photo / elements.envato.com

Despite the fact that vaccination processes against the coronavirus are increasingly advanced, and quarantines are being made more flexible, economists believe that the trend to increase debt will continue if no action is taken on the matter. And it is that since 2018 it was determined that the world deficit was increasing in worrying numbers, going from 318% of GDP to 320% in just one year.

The private sector is the most vulnerable to debt

The private sector could be one of the most affected by this situation, as companies in this niche have increased their dependence on government support to avoid bankruptcy and defaults. However, economists such as Khadija Mahmood stress that governments need to come up with a new global strategy for “these extraordinary fiscal measures.”

In this way, experts recommend the withdrawal of measures to stimulate the economy. A plan that they must evaluate in order not to generate even more crisis in the financial sector. This is a recommendation also suggested by Mervyn King, former governor of the Central Bank of England, who believes that a debt crisis is looming in both Europe and the United States.

The conditions of the world economy, without a doubt, are exceptional due to the coronavirus pandemic. As debt numbers rise to worrying levels, US banks are also beginning to respond negatively to the excess cash circulating on the streets as a result of over-issuance of dollars and financial aid. Given this reality full of uncertainty, it seems that alternative money is the one that is benefiting the most from this crisis, with bitcoin standing out here.