Global Debt Hits $338 Trillion
Global Debt Soars by $21 Trillion, Nears $338 Trillion Mark
The world’s total debt surged by more than $21 trillion in the first half of this year, climbing to a record $337.7 trillion, according to a new report by the Institute of International Finance (IIF).
The sharp rise, the IIF noted, is comparable to the debt buildup seen during the height of the COVID-19 pandemic in late 2020.
Debt Growth Across Major Economies
The largest jumps in debt came from China, France, the United States, Germany, Britain, and Japan. Part of the increase was linked to a weaker U.S. dollar, which has dropped nearly 10% against a basket of major currencies since the start of the year.
In terms of debt-to-GDP ratios — a measure of how sustainable debt levels are compared with economic output — Canada, China, Saudi Arabia, and Poland recorded the steepest rises. On the other hand, Ireland, Japan, and Norway saw their ratios decline.
Globally, the debt-to-GDP ratio eased slightly but still stood at more than 324%. In emerging markets, however, the figure climbed to a record 242.4%.
Record Debt in Emerging Markets
Emerging economies added $3.4 trillion in the second quarter alone, pushing their total debt past $109 trillion. The IIF warned that these markets now face nearly $3.2 trillion in bond and loan repayments in the remainder of 2025 — the highest on record.
Rising Military Spending and Bond Market Strains
Emre Tiftik, IIF’s director of sustainable research, said growing military budgets and geopolitical tensions are putting additional pressure on government finances. He stressed that most of the debt buildup is in government borrowing, especially in the G7 nations and China.
Bond market pressures are also mounting. Yields on 10-year government bonds in G7 economies are now near their highest levels since 2011, reflecting investor unease. The IIF cautioned that “bond vigilantes” — investors who dump bonds of heavily indebted nations — could pose risks for advanced economies like Japan, Germany, and France.
U.S. Debt Concerns
The report raised red flags about U.S. debt, highlighting that short-term borrowing makes up about one-fifth of total debt and 80% of Treasury issuance. This heavy reliance, the IIF warned, could increase political pressure on the Federal Reserve to keep interest rates low, potentially undermining its independence.
Mutib Khalid is a skilled content writer and digital marketer with a knack for crafting compelling narratives and optimizing digital strategies. Excel in creating engaging content that drives results and enhances online presence. Passionate about blending creativity with data-driven approaches, Mutib Khalid helps brands connect with their audience and achieve their goals.
