Global debt reached an all-time high of $337.7 trillion at the end of the second quarter, according to a new report by the Institute of International Finance (IIF). The sharp rise was fueled by easier financial conditions, a weaker U.S. dollar, and more accommodative central bank policies.
The report showed global debt surged by more than $21 trillion in the first half of 2025. Countries including the United States, China, Japan, Germany, Britain, and France recorded the largest increases. Part of the growth reflected the weakening dollar, which has lost nearly 10% of its value this year against major currencies.
The IIF noted that the recent surge in global debt is comparable to levels seen during the pandemic in 2020, when governments launched massive spending programs. The overall debt-to-GDP ratio now stands slightly above 324%, with emerging markets setting a new record at 242.4%.
Emerging economies saw debt climb by $3.4 trillion in the second quarter, pushing the total past $109 trillion. Analysts warned that rising military spending and geopolitical tensions are straining government budgets, especially in G7 nations and China.
Bond markets are showing signs of pressure. Yields on 10-year bonds in advanced economies have risen to their highest levels since 2011. The IIF also highlighted that emerging markets face nearly $3.2 trillion in bond and loan repayments due by the end of 2025.
Experts cautioned that fiscal pressures could intensify in highly indebted countries such as Japan, Germany, and France. In the U.S., short-term borrowing now accounts for 20% of total debt and 80% of Treasury issuance. The IIF warned that such reliance may raise political pressure on central banks, potentially affecting monetary policy independence.
Overall, the record rise in global debt underlines growing financial risks for both developed and emerging economies.
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