LONDON: Global debt levels have climbed $500 billion in the past year to a record $217 trillion, a new study shows, just as major central banks prepare to end years of super-cheap credit policies.
World markets were jarred this week by a chorus of central bankers warning about overpriced assets, excessive consumer borrowing and the need to begin the process of normalizing world interest rates from the extraordinarily low levels introduced to offset the fallout of the 2009 credit crash.
This week, US Federal Reserve chief Janet Yellen has warned of expensive asset price valuations, Bank of England (BoE) Gov. Mark Carney has tightened controls on bank credit and European Central Bank (ECB) head Mario Draghi has opened the door to cutting back stimulus, possibly as soon as September.
Years of cheap central bank cash have delivered a sugar rush to world equity markets, pushing them to successive record highs. But another side effect has been explosive credit growth as households, companies and governments rushed to take advantage of rock-bottom borrowing costs.
Global debt, as a result, now amounts to 327 percent of the world’s annual economic output, the Institute of International Finance (IIF) said in a report late on Tuesday.
One of the most authoritative trackers of global capital flows, the IIF report highlighted “rollover” risks, especially in emerging markets that have borrowed in hard currencies such as euros and dollars.
Such debts will become costlier to service if Western interest rates rise and currencies strengthen.
While US interest rates have already been raised four times, the euro has surged to one-year highs after Draghi’s comments on Tuesday, while German 10-year government bond yields — the benchmark for euro-area borrowing — have doubled over the past two days.
The Fed too seems intent on continuing to tighten policy — Philadelphia Fed President Patrick Harker said this week balance sheet normalization should be put on “autopilot.”
And despite Britain’s tepid economy, several BoE rate-setters too voted this month to raise interest rates.
The IIF said the surge in indebtedness was largely down to a $3 trillion rise in debt levels across the developing world, which now has debt totaling $56 trillion. That is 218 percent of their combined gross domestic product (GDP), a 5-percentage point rise over year-ago levels, it said.
China accounted for $2 trillion of this rise, with its debt now at almost $33 trillion, data showed.
“Rising debt may create headwinds for long-term growth and eventually pose risks for financial stability,” the IIF said.
“In some cases, this sharp debt build-up has already started to become a drag on sovereign credit profiles, including in countries such as China and Canada.”
The report acknowledged that advanced economies had continued to deleverage, cutting total public and private debt by more than $2 trillion in the past year, but this was mainly due to the euro zone. Total US debt rose $2 trillion to more than $63 trillion in the first quarter of this year.
But even in the euro zone, household borrowing is at a post-crisis high, data showed this week. The BoE plans to soon publish tighter rules on consumer lending and is bringing forward checks on banks’ ability to cope with consumer loan losses.
But it is in the developing world that stresses are most likely to emerge, the IIF noted.
First, emerging hard currency-denominated debt rose by $200 billion in the past year — growing at its fastest pace since 2014 — and 70 percent of this was in dollars, its report found.
Second, emerging markets have a hefty debt repayment schedule with more than $1.9 trillion of emerging bonds and loans falling due by end-2018, and 15 percent of this denominated in dollars. The biggest redemptions were in China, Russia, Korea and Turkey, the IIF added.
“Rollover risk is high,” the report said.
Any significant central bank policy shift risks derailing emerging debt markets, which have delivered robust returns in recent years and are up 7-10 percent in dollar terms in 2017.
Global borrowing hits record $217 trillion: Report
Global borrowing hits record $217 trillion: Report
From barrels to bytes: How AI is powering Saudi Arabia’s industrial transformation
- Inside the Kingdom’s drive to merge energy expertise with digital intelligence
RIYADH: Artificial intelligence is moving beyond concept to become a cornerstone of Saudi Arabia’s energy sector, reshaping how oil, gas, and power systems are managed and optimized.
Industry giants like Saudi Aramco are embedding smart systems into their operations to boost efficiency, reliability, and sustainability—key pillars in the Kingdom’s efforts to modernize its industrial base and diversify its economy.
According to the International Energy Agency, oil and gas companies were among the first to adopt digital technologies. The agency estimates that applying AI to power plant operations and maintenance could save up to $110 billion annually by 2035 through reduced fuel consumption and maintenance costs.
For Saudi Arabia, this technological momentum offers both a blueprint and an opportunity. Under Vision 2030, integrating data and intelligent automation is transforming how energy is explored, refined, and delivered.
At the heart of Saudi Aramco’s operations is a digital transformation strategy centered on artificial intelligence, big data, and the industrial Internet of Things. These technologies are applied at every stage of production—from mapping reservoirs and optimizing drilling to improving efficiency and safety.
AI also underpins Aramco’s Digital Transformation Program, which develops in-house smart tools and data-driven platforms designed to cut emissions, reduce costs, and enhance performance while ensuring a reliable energy supply.
A prime example is the Upstream Innovation Center, where engineers have implemented AI solutions that reduce fuel gas use in boilers, improve efficiency, and detect potential leaks through fiber-optic monitoring. At the Khurais oil field, more than 40,000 sensors monitor approximately 500 wells via an Advanced Process Control system—the first of its kind for a conventional oil field at Aramco. Digitization at Khurais has increased production by around 15 percent, doubled troubleshooting speed, and lowered both costs and environmental impact.
These advances illustrate how Aramco’s network is evolving into a connected, adaptive model, blending traditional engineering expertise with digital intelligence.
DID YOU KNOW?
• AI could save up to $110 billion a year in global power plant fuel and maintenance costs by 2035.
• Advanced Process Control enables real-time monitoring of hundreds of oil wells in the Kingdom.
• AI-powered simulations now replace weeks of manual analysis, enabling faster operational decisions.
As Saudi Arabia develops an AI-driven energy economy, the King Abdullah University of Science and Technology is bridging the gap between digital innovation and industrial application.
Bernard Ghanem, chair of the Center of Excellence for Generative AI, said the university is working with Saudi Aramco to develop AI systems that predict the chemical properties of materials and accelerate research into direct air capture technologies for carbon dioxide removal.
He told Arab News that KAUST is partnering with SABIC and ACWA Power to apply AI in process optimization and materials discovery, turning lab-scale research into practical solutions for the energy sector.
Ghanem said KAUST’s generative AI materials program combines a robotic chemistry lab with its AI Chemist foundation model, a system that accelerates the development of catalysts, battery materials, and membranes for clean energy applications.
“This is our lab of the future, automating experimentation and speeding up energy innovation,” he said.
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Mani Sarathy, professor of chemical engineering at KAUST, noted that AI-based reinforcement learning tools are already improving efficiency in hydrocarbon refineries by enhancing simulations and shortening analysis cycles.
“AI is helping energy companies run complex simulations that once took weeks, enabling faster and more precise operational decisions,” he told Arab News.
Sarathy added that the next phase will combine automation with expert oversight. Hybrid human-AI control systems, he explained, are likely to become standard in critical operations, balancing digital autonomy with safety and reliability as Saudi industries expand AI deployment.
These efforts highlight KAUST’s growing role in transforming AI from an academic discipline into a driver of industrial innovation in Saudi Arabia’s energy sector under Vision 2030.
Meanwhile, Skeleton Technologies is bringing AI-driven energy storage solutions to Saudi partners, solutions that are already reshaping industrial systems across Europe and beyond. In Europe, the company combines artificial intelligence and advanced materials to reduce energy use and improve efficiency in data centers, electricity grids, and defense systems.
“Our solutions allow AI infrastructure to consume less electricity and reduce grid connection needs, making AI operations more energy efficient,” Arnaud Castaignet, vice president of government affairs and strategic partnerships at Skeleton, told Arab News.
Inside its factories, Skeleton uses AI-driven digital twin models, created with Siemens Digital Industries, to simulate production, optimize operations, and enable predictive maintenance, Castaignet said. At the core of its technology is curved graphene, a proprietary carbon material that gives Skeleton’s supercapacitors exceptional conductivity.
“It allows our supercapacitors to charge and discharge within microseconds, around 12 microseconds, something batteries cannot do,” Castaignet said.
The company’s flagship Graphene GPU system, built on these supercapacitors, cuts energy use in AI data centers by up to 40 percent and reduces grid requirements by 45 percent while boosting computing performance. The devices are free of lithium, nickel, and cobalt, relying instead on graphene derived from silicon carbide—essentially sand—processed entirely in Germany.
“To build sustainable AI infrastructure, you need energy-saving hardware as well as renewable power,” Castaignet added. “Our Graphene GPU shows both can work together.”
As Saudi Arabia continues linking engineering expertise with digital intelligence, its industrial progress is measured not only in barrels of oil but also in bytes, data, and the smart systems shaping its energy future.
