Why global debt just jumped by $29 trillion in one year

Global debt expanded by nearly $29 trillion over the course of 2025, marking the fastest annual rise since the pandemic period, the Institute of International Finance (IIF) said in its latest Global Debt Monitor.

Governments accounted for more than $10 trillion of the increase, with the United States, China, and the euro area responsible for about three-quarters of the total jump. The data indicate that fiscal deficits in large economies have become the main engine of global borrowing, replacing the earlier surge led by households and companies during the pandemic years.

By the end of 2025, government debt stood at approximately $106.7 trillion, up from $96.3 trillion a year earlier. Non-financial corporate debt reached about $100.6 trillion, while household debt rose more gradually to $64.6 trillion.

Total debt in advanced economies climbed to around $231.7 trillion, while emerging markets reached roughly $116.6 trillion, both new highs. As a share of global output, overall debt edged down slightly to about 308% of GDP, largely due to developments in advanced economies. In contrast, debt ratios in emerging markets continued to rise, surpassing 235% of GDP.

The IIF noted that easier financial conditions, supportive monetary policy, and regulatory adjustments could encourage further borrowing. At the same time, it warned that higher leverage may increase sensitivity to interest rate changes and investor sentiment, especially as public debt plays a larger role in global balance sheets.

Sovereign bond issuance was particularly strong at the start of the year, as governments moved early to secure funding for budget needs. Corporate borrowers also remained active, with U.S. investment-grade issuance supported by large technology and industrial companies. High-yield bonds, leveraged loans, and initial public offerings also saw steady activity amid solid investor demand.

Looking ahead, the International Monetary Fund projects global growth of about 3.3% in 2026, including roughly 1.8% in advanced economies and just over 4% in emerging markets. While these rates are stable, they may not be sufficient to significantly reduce debt burdens if borrowing continues at the 2025 pace.

Emerging markets face more than $9 trillion in debt redemptions in 2026, while mature economies must refinance over $20 trillion in maturing bonds and loans, according to IIF estimates. The institute said that strong investor appetite has so far kept funding conditions orderly, but fiscal policy decisions will remain central to the trajectory of global debt levels in the coming years.

Earlier, Qazinform News Agency reported that Japan’s total debt surged to a record 1,342.17 trillion yen ($8.6 trillion) in 2025, twice the size of its GDP.