Govt spending lifts global debt to a record USD348trn in 2025: IIF
NEW YORK: Global debt climbed to a record USD348 trillion at the end of 2025, after nearly USD29 trillion was added over the year in the fastest yearly build-up since the pandemic surge, a banking trade group reported on Wednesday.
The increase was driven primarily by governments, which accounted for more than USD10 trillion of the rise, with the United States, China and the euro area responsible for roughly three-quarters of the jump, the Institute of International Finance said in its latest Global Debt Monitor.
The data point to a global debt cycle now driven less by households or companies and more by persistent fiscal deficits in major economies, as bond markets have absorbed record debt sales at the start of the year.
With global growth expected to remain steady but moderate, the question for investors is whether borrowing can keep accelerating without pushing debt ratios higher again or testing demand for sovereign paper.
As a share of output, global debt edged lower to about 308 percent of GDP in 2025, the report said, driven mainly by advanced economies. Debt ratios in emerging markets continued to climb, hitting a record above 235 percent of GDP.
“A powerful mix of fiscal expansion, accommodative monetary policy, and ‘lighter-touch’ regulatory simplification could drive further debt accumulation — while heightening concerns about rising leverage and overheating in parts of the market,” the IIF said, pointing to persistent fiscal deficits across major economies.
Government debt globally stood at roughly USD106.7 trillion at year-end, up from USD96.3 trillion at end-2024, while non-financial corporate debt reached about USD100.6 trillion. Household liabilities rose more moderately to USD64.6 trillion, the data showed.
In mature markets, total debt climbed to around USD231.7 trillion, while emerging markets reached about USD116.6 trillion, both fresh record highs.
The composition shift is notable: private-sector debt ratios have fallen from pandemic peaks, while public debt continues to expand. That structural tilt toward sovereign leverage leaves global balance sheets more exposed to shifts in interest rates and investor confidence. January saw one of the busiest starts to a year on record for sovereign bond issuance globally, as governments rushed to pre-fund budget needs while investor demand remained firm.
Corporate borrowers have also been active. US investment-grade issuance is on track for another strong year after a rapid January, helped by large technology and industrial issuers.
“Easier financial conditions should support efforts to mobilize much-needed capital for national priorities, including defence finance,” said the IIF report.