Global debt has surged to an all-time high of $337.7 trillion by the end of the second quarter, according to the Institute of International Finance (IIF). The rise, fueled by easing global financial conditions, a weaker U.S. dollar, and accommodative central bank policies, marks a $21 trillion jump in just the first half of 2025.
The IIF noted that China, France, the United States, Germany, Britain, and Japan accounted for the largest debt increases in dollar terms, though part of this growth was due to the U.S. currency losing 9.75% against a basket of major currencies since the start of the year.
The debt surge was described as comparable to the COVID-era buildup in late 2020. Debt-to-GDP ratios climbed most sharply in Canada, China, Saudi Arabia, and Poland, while falling in countries such as Ireland, Japan, and Norway. Globally, the debt-to-output ratio now stands just above 324%. Emerging markets, however, hit a record 242.4%, with their overall debt rising by $3.4 trillion in Q2 to exceed $109 trillion.
Emre Tiftik, IIF’s Sustainable Research Director, cautioned that military spending and geopolitical tensions will further strain government balance sheets. He highlighted that the rise is concentrated in government debt, especially within G7 nations and China, with bond market reactions more severe in advanced economies. Yields on G7 10-year bonds are hovering near their highest levels since 2011.
The IIF also warned that emerging markets face nearly $3.2 trillion in bond and loan redemptions through the remainder of 2025. Advanced economies, particularly Japan, Germany, and France, may face “bond vigilantes” if fiscal strains deepen. U.S. debt risks were also flagged, with short-term borrowing making up 20% of total debt and 80% of Treasury issuance, raising concerns about political pressure on central banks to maintain low rates.
Global Debt Soars to $338 Trillion, IIF Warns of Rising Fiscal Pressures
