The total amount of debt owed by countries around the world hit a record high of $250.9 trillion at the end of June. According to a recent report from the Institute of International Finance, a non-partisan think-tank, this figure is estimated to rise by the end of the year.
"Spurred by looser financial conditions, the ballooning global debt load increased by $7.5 trillion in [the first half of] 2019-and now hovers near a new record of over $250 trillion," as quoted by the Forbes magazine from the said report.
US and China lead the way
The increase in borrowing could also be due to several interest rates cuts by major central banks around the world, including USA's Federal Reserve and European Union's ECB.
With the support of these low rates, the US and China, who have been historically large borrowers of debt, accounted for 60 percent of the $7.5 trillion increase in borrowing seen in the first half of this year.
Debt accumulation and economic slowdown go hand-in-hand
The total debt owed by countries to lenders is now three times the global GDP. IIF has estimated the global borrowings to surpass $255 trillion this year, with a few signs of a slowdown in debt accumulation.
Further, the report said that in 2020, nearly 60 percent of the world's economies are likely to have less than normal growth, making it difficult for those with high government debt to turn to fiscal stimulus.
It is a usual practice for governments to increase spending in order to boost the economy when unemployment and other crisis arise.
Countries are now torn between making efforts to switch to a low carbon economy and reducing their high exposure to debt. It could cause countries to shelve plans that will curb climate change.