Government spending lifts global debt to a record $348 trillion in 2025, says IIF

Core Insights - Global debt reached a record $348 trillion by the end of 2025, with an increase of nearly $29 trillion over the year, marking the fastest annual growth since the pandemic surge [1][2] Government Debt - Government spending was the primary driver of the debt increase, contributing over $10 trillion, with the U.S., China, and the euro area accounting for approximately three-quarters of this rise [2] - Global government debt stood at about $106.7 trillion at the end of 2025, up from $96.3 trillion at the end of 2024 [4] Debt Composition - The shift in debt composition shows a decline in private-sector debt ratios from pandemic peaks, while public debt continues to grow, increasing exposure to interest rate changes and investor confidence [5] - Total debt in mature markets reached around $231.7 trillion, while emerging markets hit approximately $116.6 trillion, both representing record highs [4] Corporate Borrowing - Corporate borrowers, particularly in the U.S., have been active, with investment-grade issuance expected to remain strong, driven by large technology and industrial firms [6] - AI-related investments are identified as a significant factor in corporate borrowing, with a focus on infrastructure and energy security [8] Economic Outlook - The IMF projects global growth of about 3.3% in 2026, with advanced economies growing around 1.8% and emerging markets just above 4%, which may not be sufficient to reduce rising debt levels [9] - Emerging markets face record refinancing needs exceeding $9 trillion in 2026, while mature markets have over $20 trillion in maturing bonds and loans [9] Market Dynamics - Strong demand has maintained orderly funding conditions, but elevated public borrowing and heavy rollover needs suggest that global debt levels will likely remain near historic highs [10]