Global debt surged to a record $348.3 trillion at the end of 2025, after nearly $29 trillion was added over the year, marking the fastest annual increase since the pandemic, according to the Institute of International Finance (IIF) report released on Wednesday.
The rise was largely driven by government borrowing, which accounted for more than $10 trillion of the increase. Almost three-quarters of this came from the United States, China, and the euro area, highlighting how fiscal deficits in major economies are shaping the global debt picture. In simple terms, many governments borrowed heavily to fund spending, rather than relying on private or corporate debt.
Debt climbed across both advanced and emerging markets. Total debt in advanced economies reached $231.7 trillion, while emerging markets collectively hit $116.6 trillion.
Despite the record nominal level, the global debt-to-GDP ratio fell slightly to about 308%, mainly due to growth in advanced economies. Emerging markets, by contrast, saw debt ratios rise to a new record above 235%.
Sector-specific debt at the end of 2025 was:
Household and corporate debt ratios fell slightly, while public debt continued to expand. In emerging markets, the largest government borrowing increases were in China, Brazil, Mexico, Russia, and the euro area.
The IIF attributed the surge to:
“Easier financial conditions should support mobilisation of capital for national priorities, including defence and infrastructure,” the report said.
The global debt build-up increases exposure to interest rate shifts and investor sentiment. With public borrowing expected to remain strong in 2026, especially in the U.S., China, Germany, Japan, and India, debt levels are likely to stay near historic highs.
Emerging markets face a record $9 trillion in refinancing needs, while mature markets have over $20 trillion in maturing bonds and loans. Continued borrowing at 2025’s pace could see debt-to-GDP ratios rise again, particularly in leveraged emerging economies.
The IMF projects global growth of 3.3% in 2026, with advanced economies at 1.8% and emerging markets just above 4%. While steady, this growth may not offset rising debt stocks.
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