Global debt has reached a record level of $348,000 trillion at the end of 2025, after rising by nearly $29,000 trillion over the year, making it the fastest annual increase since the surge seen during the pandemic, a banking industry trade group said on Wednesday.
This increase was mainly driven by governments, accounting for over $10,000 trillion of this rise. The United States, China, and the Eurozone are responsible for about three-quarters of this progression, according to the Institute of International Finance (IIF) in its latest Global Debt Monitor publication.
Data shows that the global debt cycle is now less driven by households or businesses and more by persistent budget deficits in major economies, as bond markets have absorbed record debt issuances early in the year.
With stable but modest global growth expected, the question for investors is whether borrowing can continue to accelerate without increasing debt ratios or testing demand for sovereign debt.
As a percentage of GDP, global debt has slightly decreased to around 308% of GDP in 2025, mainly due to advanced economies. Debt ratios in emerging markets have continued to climb, reaching a record above 235% of GDP.
“A powerful mix of fiscal expansion, accommodative monetary policy, and regulatory easing on the margins could lead to further debt accumulation, while raising concerns about rising debt levels and overheating in certain market segments,” the IIF pointed out, highlighting the persistence of budget deficits in major economies.
Sovereigns dominate in a context of record issuances:
Global public debt stood at around $106.7 trillion at the end of the year, compared to $96.3 trillion by the end of 2024, while non-financial corporate debt reached nearly $100.6 trillion. Household obligations increased more moderately, to $64.6 trillion, according to published data.
In mature markets, total debt climbed to about $231.7 trillion, while emerging markets reached nearly $116.6 trillion, both new records.
The shift in composition is noteworthy: private sector debt ratios have decreased since the pandemic peaks, while public debt continues to rise. This structural shift towards sovereign debt exposes global balance sheets more to changes in interest rates and investor confidence.
January saw one of the most active starts to the year ever in terms of global sovereign bond issuances, as governments rushed to finance their budgets with strong investor demand.
Issuing companies have also been active. U.S. investment-grade bond issuances are heading for a dynamic new year, driven by major players in the technology and industrial sectors.
“More favorable financial conditions should support efforts to raise the necessary capital for national priorities, including defense financing,” notes the IIF report. “A powerful new wave of global investment spending ‘supercycles’ is reinforcing this dynamic, with massive investments planned in AI-driven data centers, security, energy transition, and resilient infrastructure, all major drivers for global debt markets.”
The IIF emphasizes that easier financing conditions and a strong risk appetite have also supported issuances in high-yield bonds, leveraged loans, and IPOs.
In this context, global debt could continue to rise in 2026 if budget deficits remain high and companies continue to finance their investments through the bond market, the organization warns.
Little room for maneuver in growth:
The IMF, in its January 2026 update of the World Economic Outlook, anticipates global growth of around 3.3% in 2026, with an expansion of 1.8% for advanced economies and just over 4% for emerging markets.
Stable paces compared to recent years but insufficient to quickly dilute rising debt stocks. If borrowing continues at the 2025 pace, debt-to-GDP ratios could rise again, especially in emerging markets where financial leverage is already at highs.
The IIF estimates that emerging markets will have to face over $9 trillion in debt repayments in 2026, a record in terms of refinancing, while mature markets will have to manage over $20 trillion in bonds and loans coming due.
For now, strong demand has helped maintain orderly financing, according to the IIF. But the combination of high public debt, massive refinancing needs, and record issuances early in the year suggests that global debt should remain close to its historical highs, with fiscal policy choices playing a crucial role in the evolution of balance sheets on a global scale.
