Global Debt Reached Record $348 Trillion in 2025
Global debt surged to a record $348 trillion in 2025, an increase of $15 trillion year-over-year, according to the Institute of International Finance. The IIF attributed the rise to aggressive government spending. The International Monetary Fund has warned that the rising debt, along with tariff risks, could trigger renewed market volatility.
- While the total global debt-to-GDP ratio declined for the fifth consecutive year to approximately 308% in 2025, the ratio in emerging markets surged to a new record of over 235%. - The accumulation of debt accelerated sharply in 2025, with about two-thirds of the increase originating from advanced economies, largely due to increased fiscal deficit spending. - A breakdown of the $348.3 trillion global debt in the fourth quarter of 2025 shows public debt at $106.7 trillion, non-financial corporate debt at $100.6 trillion, household debt at $64.6 trillion, and financial sector debt at $76.4 trillion. - Developing countries are facing significantly higher borrowing costs, with interest rates two to four times higher than those for the United States since 2020, leading to a net resource outflow of $25 billion in 2023 as they paid more in debt servicing than they received in new funds. - In 2024, 3.4 billion people lived in developing countries where government spending on interest payments exceeded spending on either health or education. - In the first half of fiscal year 2025, the U.S. federal budget deficit reached $1.3 trillion, with interest payments alone totaling $497 billion, a 13% increase from the same period in the previous year. - Central banks in OECD countries have reduced their holdings of domestic sovereign bonds from 29% of total debt in 2021 to 19% in 2024, shifting the debt burden more towards households and foreign investors, which could increase market volatility. - Persistently higher interest rates are increasing refinancing risks; in the next three years, 42% of total sovereign debt and 38% of all outstanding corporate bond debt is scheduled to mature, forcing refinancing at likely higher costs.
